What is the main goal of fundamental analysis?

To identify undervalued or overvalued securities

What does the Price/Earnings (P/E) ratio help investors assess?

The stock price relative to earnings

Which of the following defines a bull market?

A market with extended rising prices

Which of the following is part of Fundamental Analysis?

Examining financial data, management, and business concept

Which statement is TRUE about a high P/E ratio?

It signifies the stock is priced relatively high to its earnings.

Technical Analysis is based on the assumption that:

Prices move in trends based on market sentiment.

Which of the following is a formula for bond valuation?

Price of Bond = ∑ (C / (1 + r)^t) + (F / (1 + r)^n)

Which metric is used to calculate stock price-to-earnings growth potential?

Projected Earnings Growth (PEG) Ratio

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AC5103 Session 3 Recap

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Questions 21

Answers

1
Which ratio is used to assess how much money a company is making for its shareholders?
Earnings Per Share (EPS)
Debt-to-Equity Ratio
Dividend Yield
Price-to-Book (P/B) Ratio
2
Which phase of Fundamental Analysis focuses on examining macroeconomic factors?
Industry Analysis
Economic Analysis
Company Analysis
Sectoral Analysis
3
What is the main goal of fundamental analysis?
To only focus on dividend payments
To time the market for trades
To maximise short-term profits
To identify undervalued or overvalued securities
4
The textbook for this module is Hillier, et al (2024) Corporate Finance
False
True
5
What does NPV stand for in investment appraisal?
Notional Present Value
Non-Profit Value
Net Profit Value
Net Present Value
6
What does IRR stand for?
Internal Rate of Return
Investment Return Rate
Initial Rate of Revenue
Interest Rate of Return
7
What does the Price/Earnings (P/E) ratio help investors assess?
The company’s market share
The stock’s dividend potential
The stock price relative to earnings
The company’s future earnings growth
8
Which of the following defines a bull market?
A period of falling stock prices
A market with extended rising prices
A market where bonds outperform stocks
A market with constant sideways trends
9
Which of the following is part of Fundamental Analysis?
Forecasting future price movements using chart patterns
Examining financial data, management, and business concept
Analysing stock price momentum
Studying past prices and volumes
10
Which formula represents the Present Value (PV) of an investment?
PV = NPV - Initial Investment
PV = IRR + FV
A) PV = FV * (1 + r)^t
PV = FV / (1 + r)^t
11
Which of the following is a tool used in Technical Analysis?
Payback Period
Earnings Per Share (EPS)
Moving Averages
Dividend Discount Model (DDM)
12
Which statement is TRUE about a high P/E ratio?
It shows the stock is undervalued.
It suggests the company pays no dividends.
It signifies the stock is priced relatively high to its earnings.
It indicates the stock is priced relatively low to its earnings.
13
Which of the following is a key concept in capital budgeting?
Payback Period
Net Operating Margin
Cost of Goods Sold
Tax Bracket Calculation
14
The Dividend Discount Model (DDM) calculates the price of equity using which formula?
Price of Equity = EPS * Stock Price
Price of Equity = D / (r - g)
Price of Equity = ∑ (C / (1 + r)^t)
Price of Equity = NPV - Initial Investment
15
Technical Analysis is based on the assumption that:
Market prices always reflect a stock's true value.
Prices move in trends based on market sentiment.
Historical price data is irrelevant to predicting future trends.
Market inefficiencies are rare and unpredictable.
16
Which of the following is NOT a goal of financial management?
Minimise costs
Maintain steady earnings growth
Increase employee turnover
Maximise profits
17
Which of the following is NOT typically a factor considered in a macro-environment analysis?
Employee satisfaction
Social factors
Political factors
Technological factors
18
Which approach combines Economy, Industry, and Company (EIC) analysis?
Trend Analysis
Top-down Approach
Microeconomic Approach
Bottom-up Approach
19
Which of the following is a formula for bond valuation?
Price of Bond = (D / (r - g))
Price of Bond = ∑ (C / (1 + r)^t) + (F / (1 + r)^n)
Price of Bond = NPV - Initial Investment
Price of Bond = FV / (1 + r)^t
20
Which type of trend describes stock prices trading within the same range?
Expansion market
Sideway trend
Bull market
Bear market
21
Which metric is used to calculate stock price-to-earnings growth potential?
Dividend Yield
Projected Earnings Growth (PEG) Ratio
Net Asset Value (NAV)
Price-to-Book (P/B) Ratio

AC5103 Session 3 Recap Flashcards | StudBud