Examen 1. Etapa 2 Equity

Meridian Foods trades at $60 per share. The company reported trailing earnings per share (EPS) of $5.00 and analysts forecast next year’s EPS to be $6.00. Based on this information, Meridian’s trailing price-to-earnings (P/E) and leading (forward) P/E ratios are closest to:

An analyst gathers the following data for Corriente Industries: expected dividend payout ratio of 40%, required return on equity of 10%, and a sustainable dividend growth rate of 4%. Using the method of forecasted fundamentals, the justified leading (forward) P/E ratio is closest to:

For Corriente Industries (dividend payout ratio 40%, required return 10%, sustainable growth 4%), the justified trailing P/E ratio based on forecasted fundamentals is closest to:

The primary rationale for building a detailed financial statement forecast model in equity valuation is that it:

In a top-down revenue forecast within a financial statement model, an analyst typically begins by estimating:

Alveo Systems forecasts current-year revenue of $500 million growing 8% next year, with cost of goods sold (COGS) expected to remain at 60% of revenue. Alveo’s forecast next-year gross profit is closest to:

Which of the following best describes a primary purpose of conducting industry analysis before analyzing an individual company?

An analyst groups companies according to the products and services they sell and the markets they serve, using a system such as the Global Industry Classification Standard (GICS). This is best described as a:

A limitation of grouping companies using a statistical (correlation-based) classification method is that:

Meridian Tools competes in a mature power-equipment industry by charging a 15% price premium supported by a reputation for durability, patented motor technology, and a dense branded service network. According to Porter’s generic strategies, Meridian is *most likely* pursuing a strategy of:

An analyst assessing the sustainability of a company’s competitive position notes that the firm’s chief advantage is a low-cost manufacturing footprint that a new entrant could replicate within two years by building a similar plant. This observation is *best* described as a concern about the:

A company operates in an industry with high fixed costs, undifferentiated products, and slow growth, and its three largest rivals frequently match one another’s price cuts. Within a competitive-position analysis, these conditions *most likely* indicate:

Which of the following is *most likely* an essential element of a detailed company research report?

A well-constructed equity research report typically includes a summary of the valuation, the underlying financial forecasts, and a risk section. The primary purpose of clearly disclosing the *key assumptions* driving the valuation is to:

A research report presents a base-case target price of USD 60 alongside bull-case and bear-case scenarios of USD 78 and USD 41. Including such scenario analysis in the report *most directly* helps the reader to:

A stock has a beta of 1.20. The risk-free rate is 3.5% and the equity risk premium (market return minus risk-free rate) is 5.5%. Using the CAPM, the required return on equity is *closest* to:

The risk-free rate is 4.0% and the expected market return is 9.0%. A stock with a beta of 0.85 has a CAPM required return *closest* to:

An analyst estimates a company’s required return on equity using the CAPM with a risk-free rate of 2.8%, a beta of 1.45, and an equity risk premium of 6.0%. The required return is *closest* to:

A stock’s required return, estimated with the CAPM, is 12.0%. If the risk-free rate is 3.5% and the equity risk premium is 6.8%, the stock’s beta is *closest* to:

The market model expresses a security’s return as Ri = alpha_i + beta_i x Rm + e_i. In this model, the slope coefficient beta_i is *best* interpreted as: