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CMA Final Exam: Business Valuation
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Business Valuation syllabus (Weightage: 50%):
1. Business Valuation Basics
2. Valuation in Mergers and Acquisitions
3. Fair Value in Accounting Measurement
3. Valuation of Intangibles

Related Test: CMA Final Exam: Strategic Performance Management

CMA Final Exam: Business Valuation
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25 Questions

1. Shyam Ltd has announced issue of warrants on 1: 1 basis for its equity share holders. The Exchange ratio is 1.00. The current market price of the stock is ?10 and warrants are convertible at an exercise price of ?11.71 per share. Warrants are detachable and are trading at ?3. What is the minimum price of this warrant?
2. A firm having positive PAT but negative EVA is actually ___________ Value.
3. A company with PAT of ?60 Crores, Tax Rate 30% plus a cess of 3%, Return on Equity is 20%, Other Equity Rs. 225 Crores, PAT of the Company is growing by 8% per year and equity share with a par value of Rs. 10 will have EPS of
4. Which of the following is a financial liability for a company?
5. P/E rises when:
6. Duration of a bond will __________ when the yield-to-maturity on the bond increases.
7. In the context of an acquisition of a firm, which one of the following concepts of value is least relevant?
8. An investment is risk free when actual returns are always _______ the expected returns.
9. If a company has a P/E ratio of 12 and a Market to Book Value Ratio 2.10, then its Return on Equity will be
10. Whenever the yield on a bond is more than coupon rate,
11. A Company based on up-to-date financial statements has determined that the current Free Cash Flows to Equity (FCFE) per share is ?1.00. It has outstanding number of shares 100 crores with a face value of ?10 each. Its interest expenses are ?30 crores and tax rate is 30%. Given this information, The Free Cash Flow to the Firm (FCFF) will be
12. Identify which of the following is not a financial liability?
13. Under Asset based valuation approach individual assets are valued and aggregated in the process of finding
14. Relative valuation is much more likely to reflect
15. Premium paid by target company to buy-back its shares from a potential acquirer is called ____
16. In valuing a firm, the _________ tax rate should be applied to earnings of every period
17. A ratio that presents willingness of the stock market to pay for one rupee of earning per share is called __________.
18. Increasing the company
19. A Limited is considering to acquire B Limited through all shares deal. Relevant information about these companies are given belowA Limited - B Limited
Present Earnings - (Rs. in crores)Rs. 7.50 Rs. 2.50
No. of Equity Shares (in crores)4 2
Price/Earnings Ratio 10 9
Given the above information, the exchange ratio based on the market price will be
20. Given: The risk-free rate is 5.5%; the market price of risk=7% and the company's Beta=1.2. The Cost of Equity would be
21. Divestitures represent the
22. It is assumed that M. Ltd, would realize ?40 million from the liquidation of its assets. It pays ?20 millions to its creditors and Preference Shareholders in full and final settlement of their claims. If the number of Equity Shares of M. Ltd is 2 million, the Liquidation per Share would be:
23. Given: The growth rate in the dividends is expected to be 8%. The Beta of the stock is 1.60 and the return on the market index is 13%. The required rate of return would be:
24. In condition of rising prices for change from LIFO to FIFO method,
25. A major advantage of Price/Sales ratio is that

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