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inv3701 Assignment 1 Semester 2 2024
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inv3701 Assignment 1 Semester 2 2024
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8/12/24, 4:11 PM Assessment 1Font size A- A A+ Site color R A A A
INV3701-24-S2 Welcome Message Assessment 1
QUIZ
Question 1
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Which of the following statements are most likely correct? The purpose of the valuation model include …
a. dividend payment.
b. appraising private business.
c. rendering fairness options.
Clear my choice
Question 2
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Which one of the following statements is most likely correct regarding steps and activities/actions in the
equity valuation process?
a. An analyst applies the valuation conclusions by choosing the free cash flow to equity (FCFE)
model.
b. An analyst carries out a sensitivity analysis to convert his forecast into a valuation.
c. An analyst helps the firm he is evaluating compile their financial statements to convert his
forecast into a valuation.
Clear my choice
https://mymodules.dtls.unisa.ac.za/mod/quiz/attempt.php?attempt=20828383&cmid=846496#question-21058888-3 1/9
, 8/12/24, 4:11 PM Assessment 1
Question 3 Font size A- A A+ Site color R A A A
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Use the following information to answer questions 3 to 4.
Expected rate of return CAPM required rate of FF required rate of return
return
Share 1 0.23 0.19 0.20
Share 2 0.10 0.12 0.12
Share 3 0.08 0.15 0.08
Calculate the alpha of the securities using the capital asset pricing model (CAPM).
a.
Security 1 = -0.01; Security 2 = 0; Security 3 = 0.07
b.
Security 1 = 0.03; Security 2 = -0.02; Security 3 = 0
c.
Security 1 = 0.04; Security 2 = -0.02; Security 3 = -0.07
Clear my choice
Question 4
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Use the following information to answer questions 3 to 4.
Expected rate of return CAPM required rate of FF required rate of return
return
Share 1 0.23 0.19 0.20
Share 2 0.10 0.12 0.12
Share 3 0.08 0.15 0.08
Which of the following statements are most likely correct? Based on CAPM,
security 1 is …, while security 3 is ….
Security 1 Security 3
a. overvalued undervalued.
b. undervalued overvalued.
c. undervalued fairly valued.
Clear my choice
https://mymodules.dtls.unisa.ac.za/mod/quiz/attempt.php?attempt=20828383&cmid=846496#question-21058888-3 2/9
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