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Series 86 Final Exam 3 questions and answers verified 2024
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Series 86 Final Exam 3 questions and answers verified 2024
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Series 86 Final Exam 3/4 RedoSeverance packages do not influence - correct answer ✔cash flow
Methods of calculating relative value - correct answer ✔Price/BV
Price/CF
Macroeconomic driver for fast food industry - correct answer ✔Disposable
income
Which of the following events would lower the risk of investing in Genero
Drugs, a manufacturer of generic pharmaceutical products? - correct answer
✔A competitor has won a lawsuit involving the marketing of a generic drug
When attempting to value an initial public offering of securities, an analyst
would NOT use: - correct answer ✔Comparable company analysis
A 24% ROE increases common equity by 24. What else increases? - correct
answer ✔Total capitalization
When a company issues a stock dividend, what is the effect to ROE? - correct
answer ✔No effect
Which of the following events would be a red flag to an analyst evaluating a
company's quality of earnings? - correct answer ✔Lower than normal
reserves for bad-debt expenses
What is the impact to a company who is a single buyer in a market if two
supplier in the market merge? - correct answer ✔No impact
, Which of the following events signals sales growth in a company? - correct
answer ✔Accounts receivable increase; account receivable turnover
increases.
When comparing two companies with the exact same total costs, the
company with the __________ operating leverage will be able to grow its
operating margin _________ than the company with the _________ operating
leverage. - correct answer ✔higher; faster; lower
If Company A has a lower gross margin than Company B, but both companies
have an identical EPS, you would conclude: - correct answer ✔Net income is
identical, but Company A has a lower tax rate
If concern is meeting cash requirements, then use the _____ to determine
ability to meet demand - correct answer ✔quick ratio
ROIC for shareholders - correct answer ✔ROE
Upon payment of a cash dividend - correct answer ✔Working Capital
remains the same
Which of the following is included when calculating a company's public float? -
correct answer ✔The number of shares held by institutional and retail
investors
*NOT company insiders
Consumer non-durable valuation - correct answer ✔Forward P/E
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