Company Analysis: Forecasting
0 public questions with explanations, formulas, and exam traps.
CFA Level I subject
Equity Investments practice questions
Equity Investments questions test market organization, indexes, valuation inputs, industry analysis, and equity security characteristics. This section currently includes 22 public practice questions across 10 topic modules, with explanations, formulas, traps, and key takeaways.
Indicative public exam weight: 11-14%. Start with a topic guide when you need focused review, or use adaptive mode for mixed practice and due reviews.
Company Analysis: Past and Present
0 public questions with explanations, formulas, and exam traps.
Company, Industry, and Forecasting
3 public questions with explanations, formulas, and exam traps.
Equity Valuation
6 public questions with explanations, formulas, and exam traps.
Equity Valuation: Concepts and Basic Tools
0 public questions with explanations, formulas, and exam traps.
Industry and Competitive Analysis
0 public questions with explanations, formulas, and exam traps.
Market Efficiency
2 public questions with explanations, formulas, and exam traps.
Market Organization and Structure
4 public questions with explanations, formulas, and exam traps.
Overview of Equity Securities
3 public questions with explanations, formulas, and exam traps.
Security Market Indexes
4 public questions with explanations, formulas, and exam traps.
Equity Investments
Company, Industry, and Forecasting
An analyst begins a company report by identifying how the issuer converts inputs into revenue, which customers pay, why customers choose the product, and which costs scale with unit volume. This section is best characterized as analysis of the company's:
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Company, Industry, and Forecasting
A mature industry has slow unit growth, high switching costs, few close substitutes, and suppliers whose input represents only a small portion of customers' total cost. Under Porter's Five Forces, the industry's profitability is most likely supported by:
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Company, Industry, and Forecasting
A company with stable market share in a cyclical industry forecasts revenue by projecting industry units under three macro scenarios and applying expected company market share and price inflation. The most defensible critique is that the analyst should also explicitly forecast:
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Equity Valuation
A stock just paid a USD2.40 dividend. Dividends are expected to grow indefinitely at 4.0%, and the required return is 10.0%. Under the Gordon growth model, the intrinsic value is closest to:
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Equity Valuation
A firm just paid a USD1.60 dividend. Dividends are expected to grow by 18% for two years and 5% thereafter. The required return is 11%. The two-stage DDM value is closest to:
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Equity Valuation
A nonconvertible preferred share pays an annual dividend of USD5.50. Investors require 8.5% on this preferred issue. The value is closest to:
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Equity Valuation
A company's board declares a 10% stock dividend. Before the dividend, the share price is USD55 and 20 million shares are outstanding. Ignoring taxes and signaling effects, immediately after the stock dividend the share count and theoretical share price are closest to:
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Equity Valuation
A comparable-company analysis indicates an appropriate EV/EBITDA multiple of 8.2x. The target has EBITDA of USD120 million, debt of USD260 million, cash of USD45 million, minority interest of USD30 million, preferred stock of USD20 million, and 50 million common shares. The implied value per common share is closest to:
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Equity Valuation
An asset-based valuation starts with reported assets of USD900 million. The analyst identifies an unrecorded brand worth USD80 million, PPE undervalued by USD70 million, and inventory overvalued by USD20 million. Liabilities are USD500 million and shares outstanding are 25 million. The asset-based value per share is closest to:
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Market Efficiency
A market contains thousands of analysts, low trading costs, mandatory real-time disclosure, and few legal barriers to short selling. An analyst's profitable strategy uses only past price patterns after transaction costs. The strategy's persistence would most directly challenge:
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Market Efficiency
A portfolio manager estimates a stock's value using discounted expected cash flows of USD72 while the current quoted price is USD61. The most accurate interpretation is that USD72 and USD61 are, respectively:
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Market Organization and Structure
A portfolio manager buys 1,000 shares at USD50 using 50% initial margin. The maintenance margin is 30%. Ignoring interest and dividends, the share price at which the manager would most likely receive a margin call is:
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Market Organization and Structure
A trader shorts 800 shares at USD40. The initial margin requirement is 50%. The shares are covered at USD34 after the trader pays a USD0.50 per share dividend to the lender. Ignoring commissions and margin interest, the return on the initial margin is closest to:
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Market Organization and Structure
An institutional trader submits an order: 'Buy 50,000 shares at a limit price of USD24.20, good until canceled, all-or-nothing, settle regular way.' The all-or-nothing instruction is best classified as a:
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Market Organization and Structure
A security trades in a market where dealers continuously post bid and ask prices from their own inventories. A client submits a market order during a fast market after the displayed ask changes sharply. The trade execution is most accurately described as occurring in a:
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Overview of Equity Securities
A preferred share issue pays fixed dividends, requires missed dividends to be paid before common dividends resume, and allows holders to share in earnings above a specified threshold. The issue is best described as:
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Overview of Equity Securities
A U.S. investor wants exposure to a Japanese company without trading ordinary shares in Japan and without settling in yen. The most appropriate instrument is most likely a:
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Overview of Equity Securities
A company reports book value of equity of USD600 million and market capitalization of USD1.8 billion. Its accounting ROE is 14%, estimated cost of equity is 9%, and investors currently require 11% on comparable risk equity. The most accurate statement is:
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Security Market Indexes
An equity index begins the month at 2,500 and ends at 2,625. During the month, constituent securities paid cash distributions equivalent to 40 index points. The index's total return is closest to:
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Security Market Indexes
A price-weighted index initially contains three stocks priced at 60, 90, and 150, with divisor 3. The 150 stock then has a 3-for-1 split, and the divisor is adjusted immediately. At the next close, prices are 63, 87, and 55. The index return from immediately before the split to the next close is closest to:
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Security Market Indexes
A float-adjusted market-capitalization-weighted index has three stocks. Initial data are: A: price 20, shares 10 million, float 80%; B: price 40, shares 5 million, float 60%; C: price 30, shares 8 million, float 25%. End-of-period prices are 22, 39, and 33. The index return is closest to:
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Security Market Indexes
An index committee annually updates the list of eligible securities based on market capitalization and liquidity, and quarterly resets constituent weights to target weights without changing constituents. The annual process and quarterly process are best described, respectively, as:
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