Which of the following is an inconsistency of using market multiples to determine value?

Select one:

A. Using a market multiple assumes that the target company is correctly priced, while comparable companies are mispriced.

B. Using a market multiple assumes that the target company can be fully described by its summary performance measure.

C. Using a market multiple assumes that all companies are mispriced.

D. Using a market multiple assumes that the target company is mispriced, while comparable companies are correctly priced.

2)

The equity carve-out in which the parent company distributes the subsidiarys shares as a dividend to shareholders is called which of the following?

Select one:

A. Sell-Off

B. Spin-Off

C. Split-Off

D. Stock Split

E. None of the above

3)

Nova Components is a manufacturer of computer parts. The company recently reported earnings of $2,901,314. In addition, Nova Components has 402,500 shares issued and outstanding. The company has a PE ratio of 24.6. Nova Components is part of the computer parts industry which has an industry PE ratio of 25.6. Using industry information, estimate the intrinsic value of Nova Components equity per share?

Select one:

a. $32.81

b. $184.53

c. $177.32

d. $7.50

4)

What is the risk premium for a company that has a yield rate of 6.12% when the risk-free rate is 4.78% ?

Select one:

a. 1.34%

b. 4.78%

c. 6.12%

d. None of these are correct.

e. 10.90%