Chapter7

Which of the following statements referring to valuation motives regarding changes in the ownership are correct?

a. The valuation is induced by an effective or planned change in the ownership structure in means of transaction related motives

b. No changes in the ownership structure are aspired (e.g. management/employee compensation, risk management) in means of non-transaction relating motives

c. On conflicting party can unilaterally (i.e. against the intention of the other party) induce a change in the ownership structure in means of dominated motives

d. None of the conflicting parties can unliterally induce a change in the ownership structure in means of non-dominated motives

e. All of the above-named statements are correct

f. None of the above-named statement is correct

g. Statements a) and b) are correct

h. Statements c) and d) are correct

Which of the following statements are correct?

a. The basic principle underlying is called the “purpose adequacy principle”

b. Valuation purposes according to the economical doctrine are decision value, fair market value, standard value, arbitrium value

c. Valuation purposes according to the economical practice are subjective shareholder value, objectified shareholder value, arbitrium value

d. There is no objective value

e. All of the above-named statements are correct

f. None of the above-named statement is correct

g. Statements a) and d) are correct

h. Statements a), b) and c) are correct

Which of the following statements are correct?

a. The basic principle underlying is called the “purpose adequacy principle”

b. Valuation purposes according to the economical practice are decision value, fair market value, standard value, arbitrium value

c. Valuation purposes according to the economical doctrine are subjective shareholder value, objectified shareholder value, arbitrium value

d. There is no objective value

e. All of the above-named statements are correct

f. None of the above-named statement is correct

g. Statements a) and d) are correct

h. Statements a), b) and c) are correct

Which of the following statements are correct?

a. The basic principle underlying is called the “purpose adequacy principle”

b. Valuation purposes according to the economical doctrine are decision value, fair market value, standard value, arbitrium value

c. Valuation purposes according to the economical practice are subjective shareholder value, objectified shareholder value, arbitrium value

d. There is an objective value

e. All of the above-named statements are correct

f. None of the above-named statement is correct

g. Statements a) and d) are correct

h. Statements a), b) and c) are correct

Which of the following statements referring to decision value are correct?

a. Decision value follows the principle of subjectivity of the value which means that the value represents the level of usability of a good to serve a certain purpose

b. Decision value follows the principle of subjectivity of the value which means that the price represents the exchange relationship of goods (i.e. result of a transaction)

c. A transaction exactly at the decision value leaves the assets (economic situation) of the valuation subject unchanged

d. Decision value comes in two forms: as the upper price limit (barrier) of the acquirer (buyer) and as the lower price limit (barrier) of the vendor (seller).

e. All of the above-named statements are correct

f. None of the above-named statement is correct

g. Statements a) and b) are correct

h. Statements c) and d) are correct

Which of the following statements are correct?

a. Fair market value is also known as objectified shareholder value

b. Standard value is also known as legally impressed value c. The arbitrium value is the intermediation between the diverging interests of the contracting parties

d. The arbitrium value represents an arrangement of a fair and appropriate reconciliation of interests

e. All of the above-named statements are correct

f. None of the above-named statement is correct

g. Statements a) and b) are correct

h. Statements c) and d) are correct

Which of the following statements are correct?

a. Valuation approaches are classified in income, market, asset and combined approaches

b. Gross procedures within the DCF-Approach calculate the shareholder value indirectly major gross procedures are the Entity-Approach and the APV-Approach

c. Net procedures within the DCF-Approach calculate the shareholder value directly

Which of the following statements are correct? a. Valuation approaches are classified in income, market, asset and combined approaches b. Net procedures within the DCF-Approach calculate the shareholder value indirectly major gross procedures are the Entity-Approach and the APV-Approach c. Gross procedures within the DCF-Approach calculate the shareholder value directly

Which of the following statements are correct?

a. Finite (restricted) life expectancy of the company represents the standard assumption

b. The Free Cashflow (FCF) is free for both the equity investors and the debt financiers

c. The Free Cashflow (FCF) is free for the equity investors d. The Free Cashflow (FCF) is free for the dept investors

e. All of the above-named statements are correct

f. None of the above-named statement is correct

g. Statements a) and c) are correct

h. Statements a) and d) are correct

Which of the following statements are correct?

a. Infinite (unrestricted) life expectancy of the company represents the standard assumption

b. The Free Cashflow (FCF) is free for both the equity investors and the debt financiers

c. The Free Cashflow (FCF) is free for the equity investors d. The Free Cashflow (FCF) is free for the dept investors

e. All of the above-named statements are correct

f. None of the above-named statement is correct

g. Statements a) and b) are correct

h. Statements a) and d) are correct

Which of the following statements are correct? a. Finite (restricted) life expectancy of the company represents the standard assumption b. The Free Cashflow (FCF) is free for the equity investors c. “WACC” (Weighted Average Cost of Capital) the WACC corresponds to the weighted average cost of equity capital d. “WACC” (Weighted Average Cost of Capital)

Which of the following statements are correct? a. Infinite (unrestricted) life expectancy of the company represents the standard assumption b. The Free Cashflow (FCF) is free for the equity investors c. “WACC” (Weighted Average Cost of Capital) the WACC corresponds to the weighted average cost of equity capital d. “WACC” (Weighted Average Cost of Capital)

Which of the following statements are correct?

a. Infinite (unrestricted) life expectancy of the company represents the standard assumption

b. “WACC” (Weighted Average Cost of Capital) the WACC corresponds to the weighted average cost of equity and dept capital

c. The hypothesis of irrelevance of Modigliani/Miller is a theoretical situation in which the capital structure of the business is irrelevant in calculating the shareholder value

d. The cost of equity consists of the risk-free interest rate plus a market risk premium, adjusted for the company-specific risk

e. All of the above-named statements are correct

f. None of the above-named statement is correct

g. Statements a) and b) are correct

h. Statements a), c) and d) are correct

Which of the following statements are correct?

a. The risk-free interest rate corresponds to the theoretical ideal case of a rate of return of a portfolio without any default-risk and without any correlation with other investments

b. The risk-free interest rate corresponds to the common interest rate of a (virtually) risk-free investment

c. In case of finite life expectancy of the company risk-free rate is derived according to the Svenson Method resulting from the estimated interest curve of hypothetical zero bonds

d. In case of infinite life expectancy of the company risk-free rate is derived from risk-free securities with comparable maturity

e. All of the above-named statements are correct

f. None of the above-named statement is correct

g. Statements a) and b) are correct

h. Statements b), c) and d) are correct

Which of the following statements are correct?

a. Risks concerning the investment in a company are strategic, operating, financial and cross- functional risks

b. In practice the beta is segregated into two components operating- and financial-beta

c. Operating-beta is a risk measure representing the operating business risk

d. Financial-beta is a risk measure representing the capital structure risk

e. All of the above-named statements are correct

f. None of the above-named statement is correct

g. Statements a), c) and d) are correct

h. Statements b), c) and d) are correct

Which of the following statements referring to the beta are correct?

a. The beta is a measure of the systematic risk of a security b. The higher the beta of a certain company is, the higher is the risk of the investor investing in that company compared to an investment in the market portfolio

c. The beta of the market (market portfolio) equals 1

d. A beta of a risk-free investment exactly at the risk-free interest rate equals 0

e. All of the above-named statements are correct

f. None of the above-named statement is correct

g. Statements a) and b) are correct

h. Statements a), b) and d) are correct

Which of the following statements referring to the beta are correct?

a. The beta is a measure of the unsystematic risk of a security

b. The higher the beta of a certain company is, the higher is the risk of the investor investing in that company compared to an investment in the market portfolio

c. The beta of the market (market portfolio) equals 0

d. A beta of a risk-free investment exactly at the risk-free interest rate equals 1

e. All of the above-named statements are correct

f. None of the above-named statement is correct

g. Statements a) and b) are correct

h. Statements a), b) and d) are correct

Which of the following statements referring to the beta are correct?

a. The beta of the market (market portfolio) equals 1 a beta of a risk-free investment exactly at the risk-free interest rate equals 0

b. A beta > 1 denotes that the risk of the company is higher than the market risk

c. A beta of 1 denotes that the risk of the company equals the market risk

d. A beta < 1 denotes that the risk of the company is lower than the market risk

e. All of the above-named statements are correct

f. None of the above-named statement is correct

g. Statements a) and c) are correct

h. Statements b) and d) are correct

Which of the following statements are correct?

a. The beta of the market (market portfolio) equals 1 a beta of a risk-free investment exactly at the risk-free interest rate equals 0

b. In the case of a listed company beta can be computed directly via the fluctuation of the stock price

c. In case of a non-listed company beta can be computed via the approximation using an industry-beta

d. In case of a non-listed company beta can be computed by derivation from Betas of a Peer Group of non-listed comparable companies (comparable)

e. All of the above-named statements are correct

f. None of the above-named statement is correct

g. Statements a) and b) are correct

h. Statements b), c) and d) are correct

Which of the following statements are correct?

a. Using the market approach, the value of the business is derived from the value of other, comparable companies

b. Market approach methods are classified in comparative company approach and simplified multiples (rules of thumb)

c. The SPCM derives the value of privately held businesses using trading prices of publicly traded comparable companies (“peer group”)

d. The RAM derives the value of privately held businesses using transaction prices of other privately held comparable companies that were recently transacted

e. All of the above-named statements are correct

f. None of the above-named statement is correct

g. Statements a) and c) are correct

h. Statements b) and d) are correct

Which of the following statements are correct?

a. Using the market approach, the value of the business is derived from the value of other, comparable companies

b. The market approach is based on multiples

c. Market approach methods are classified in comparative company approach and simplified multiples (rules of thumb)

d. Trailing multiples are computed based on actual and/or past prices Forward multiplies are computed based on future prices

e. All of the above-named statements are correct

f. None of the above-named statement is correct

g. Statements a) and c) are correct

h. Statements b) and d) are correct