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Which of the following statements is correct? a . A business with a gross margin of 6 0 % also generates a higher EBIT margin
Which of the following statements is correct?
a
A business with a gross margin of also generates a higher EBIT margin than a business
with a gross margin of
A business with a gross margin of has a higher tax rate than a business with a gross
b
margin of
A business with a gross margin of has a lower tax rate than a business with a gross
c
margin of
With everything else equal, a business with a gross margin of has a higher operating
d
leverage than a business with a gross margin of Part II: Valuation
Which of the following statements is correct?
With respect to stocks in the European Transport & Logistics sector and with everything
else equal, the WACC is typically higher for stocks with a high beta than for stocks with a
a low beta.
b A business' WACC increases when interest rates fall.
In a discounted cashflow valuation, the WACC is directly influenced by a business' EBIT
c
margin.
d EVEBITDA and PE PriceEarnings ratios are broadly used profitability ratios.
Which of the following statements is correct?
When a stock trades at a higher PE ratio than another stock, it will usually outperform
a
the stock with the lower PE
When a listed company has a FCF yield of or more, this means that its stock will
b
outperform a government bond with a yield of
When a stock trades at a PB value below this means that its stock faces severe
c
downside risk.
With everything else equal, stocks with a high ratio are more expensive than stocks
d
with a low ratio.
Which of the following statements is correct?
The disadvantage of the EVEBITDA multiple is that it makes it difficult to compare
businesses in different countries and with different tax regimes.
a
Stocks typically trade at a risk premium versus bonds, which is reflected in the stocks'
b Stocks typigher earnings yield EPS divided by share price
c If a stock trades at an EVEBITDA of its E ratio does not exceed
If a stock trades at a PriceEarnings PE of its PriceBook PB value is higher than
d
Which of the following statements is correct?
a If two businesses generate the same sales and EBrDDA margin, they should be worth the
same in efficient markets.
b
The fair value of a business depends, amongst others, on its outlook, its earnings power, its
balance sheet structure, and its asset intensity.
c
If two businesses generate the same net income, they showld be worth the same in
d A business that pays higher dividends is worth more than one that pays lower dividends.
Which of the following statements is correct?
a
Most stocks have a beta, which is above hence most stocks are riskier than the
market as a whole.
b If the beta increases, the cost of equity increases.
c a and b are incorrect
d a and b are correct.
Which of the following statements is correct?
a If the WACC is and the cost of equity is the cost of debt is below
b If the WACC is and the cost of equity is the cost of debt is above
c If the WACC is and the cost of equity is the beta will be below
d If the WACC is and the cost of equity is the riskfree rate will be near zero.
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