26) Risky firms have a higher risk-adjusted cost of capital. Which one of the following factors would contribute to a risky firm also having a relatively high price/earnings ratio?

A) The firm has a high earnings per share. B) The firm has a low earnings per share. C) The firm has strong growth opportunities. D) The firm has a significant amount of long-term debt.

27) Income or loss from discontinued operations is regarded as:

A) permanent earnings. B) transitory earnings. C) value-irrelevant earnings. D) abnormal earnings.

28) Income from continuing operations, excluding special or nonrecurring items, is generally regarded as:

A) permanent earnings. B) transitory earnings. C) value-irrelevant earnings. D) abnormal earnings.

29) An adjustment to income due to a non-recurring item is regarded as:

A) permanent earnings. B) transitory earnings. C) value-irrelevant earnings. D) abnormal earnings.

30) The assessment of earnings quality to calculate an implied share price is best accomplished using which of the following? A) Single-step financial statement. B) Multiple-step income statement. C) Cash flow statement. D) Single-step income statement, balance sheet, and cash flow statement.