21. The advantages of estimating a required return on equity with a three factor rather than a single factor model are; A. It takes less time and is less expensive. B. Three factor models are easier to use. C. More accurate estimates of required returns on equity and, as a result, more accurate valuations. D. There are no advantages of three factor versus the traditional CAPM models.

22. Characteristics of Growth stocks versus Value stocks include: A. Low Market-to-Book Values; Low P/E ratios; High Dividend Payout ratios. B. Firm is in a mature industry; High earnings yield; High earnings growth. C. High P/E ratios; High earnings yields; High Dividend Payout ratios. D. High Market-to-Book Values; High P/E ratios; Low Dividend Payout ratios.

23. Research indicates that Value stocks are ___________________ than Growth stocks A. Less risky. B. More risky. C. Equally risky. D. Sometimes more and sometimes less risky.

Consider the following data for a firm:

Balance Sheet 2018 2019

Total Current Assets 1,200 1,300 Fixed Assets 2,500 2,900 Total Assets 3,700 4,200

Income Statement Total Revenue (net) 3,000 Cost of Goods Sold 1,000 Selling, General & Administrative Expenses 400 Depreciation 200 Interest Expense 100 Taxes (20% tax rate)_____________________________________ 60____ 24. NOPAT = EBIT(1-Tax Rate) A. $300 B. $1,120 C. $2,000 D. $360

25. OCF = NOPAT + Depreciation A. $460 B. $2,200 C. $1,320 D. $500

26. FCFF = Net Income + Non - Cash Expenses + Change in Fixed Assets + Change in Current Assets. A. $1,240 B. $1,760 C. $1,940 D. $1,300