4. Corporate Issuers

Question: Last year, Calfee Multimedia had earnings of $4.00 per share and paid a dividend of $0.30. In the current year, the company expects to earn $5.20 per share. Calfee has a 30% target payout ratio. If the expected dividend for this year is $0.51, what time period is Calfee most likely using in order to bring its dividend up to the target payout?

• A) 6 years
• B) 4 years
• C) 5 years

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Question: Which of the following statements about dividend policy is most accurate?

• A) A person who believes in the agency cost effect and a proponent of the "bird-in- hand" theory would have opposite views on dividend payout policy
• B) A person who believes in bird-in-hand theory would have the same view as one that subscribes to the clientele theory
• C) Investors view a stock repurchase as a positive signal and a stock issue as a negative signal

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Question: Which of the following statements about a stock repurchase is least accurate?

• A) A stock repurchase occurs when a large block of stock is removed from the marketplace
• B) Disgruntled stockholders are forced to sell their shares, improving management's position
• C) Management can distribute cash to shareholders at a favorable after-tax rate

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Question: If Modigliani and Miller's dividend irrelevancy theory is correct, what is the impact on a firm's cost of capital and stockholder wealth if its dividend payout increases? Cost of Capital Stockholder wealth

• A) None A decrease
• B) An increase A decrease
• C) None None

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Question: A company is most likely to use a Dutch auction when repurchasing shares:

• A) with a tender offer Correct
• B) in the open market
• C) by direct negotiation

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Question: Paying a cash dividend is most likely to result in:

• A) an increase in liquidity ratios
• B) the same impact on liquidity and leverage ratios as a stock dividend Correct
• C) an increase in financial leverage ratios

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Question: Hikaru Takei is the portfolio manager for the Reliant Dividend Focused Fund. Takei wants to add a firm to his portfolio that follows a stable dividend policy. Takei is considering investing in one of three companies: Kirk Beauty Supplies maintains a constant dividend payout of 25 to 30%. Kelley Medical Devices increases its dividend each year in accordance with the company's long run growth rate of 4%. Barrett Satellite Systems has maintained a dividend of $2.00 per share over the last 6 years. Which stock best meets Takei's criteria?

• A) Barrett Satellite Systems
• B) Kelley Medical Devices
• C) Kirk Beauty Supplies

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Question: What is the impact on shareholder wealth of a share repurchase versus cash dividend of equal amount when the tax treatment of the two alternatives is the same?

• A) A share repurchase will sometimes lead to higher total shareholder wealth than a cash dividend of an equal amount
• B) A share repurchase will always lead to higher total shareholder wealth than a cash dividend of an equal amount
• C) A share repurchase is equivalent to a cash dividend of an equal amount, so total shareholder wealth will be the same

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Question: Laura's Chocolates Inc. (L

• A) 48%
• B) 55%
• C) 42%. Rainham Inc. has never paid a dividend from the cash flows it generates from its projects; rather it likes to reinvest them in growing the business. Rainham Inc. has experienced a period of sustained growth but management is of the opinion that this growth rate will moderate and they have therefore decided to move to a dividend pay-out. The company's cost of equity is currently estimated to be 16%, with the industry's cost of equity at around 12%. The firm has set the objective of achieving a 70% pay-out ratio. The board of directors of Rainham Inc. is worried about the impact of moving immediately to a 70% pay-out ratio; whilst this remains their long term objective they feel that a gradual build-up of the pay-out ratio to 70% would be more appropriate. The proposal is to set an initial dividend pay-out ratio in year 1 of 30% and then increase this over the following five years to 70%. Rainham Inc. has set a growth rate in earnings consistent with their long run ROE and target pay-out ratio

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Question: According to Gordon, Litner, and Graham, what will be the impact of the dividend initiation on the cost of equity of Rainham Inc.?

• A) It will increase
• B) It will decrease
• C) Unchanged

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Question: Which of the following dividend policy is consistent with the Rainham Inc.'s proposed dividend policy of setting an initial dividend payout ratio to 30% and then increase this over the following five years to 70%?

• A) Residual dividend model Correct
• B) Dividend stability
• C) Target payout ratio

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Question: The Commercial Director has mentioned four out of six factors that influence dividend policy. Which of the following is least likely to be one of the remaining two factors not mentioned?

• A) Clientele effect
• B) Taxation
• C) Financial flexibility

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Question: Rainham Inc. pays 35% taxes based on the U.S. tax laws and pays a dividend of $0.90 a share. Assuming that the investor who receives Rainham Inc.'s dividend is in the 15% tax bracket. The effective tax rate on a dollar of earnings paid out as dividends will be:

• A) Higher than 35% Correct
• B) Equal to the investor’s tax bracket of 15%
• C) Equal to the corporate tax rate of 35%

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Question: The following information is from the 10-k of Laura's Chocolates, Inc.(LC), a maker of nut- based toffees. Cash 25,000,000 Share price 40.00 Shares outstanding (prior to transaction) 20,000,000 LC decides to spend $20 million repurchasing common stock. What is the value of a share of stock after the share repurchase?

• A) 40.00
• B) 45.00
• C) 35.00

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Question: Dividend safety is most likely evidenced by:

• A) Increase in dividend and FCFE coverage ratios
• B) Increase in dividend coverage ratio but not by FCFE coverage ratio Correct
• C) Increase in FCFE coverage ratio but not be dividend coverage ratio

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Question: Laura's Chocolates, Inc. (LC), is a maker of nut-based toffees. LC is considering a share repurchase and prefers the "tender offer" method. Which of the following is also known as a "tender offer"?

• A) Buying a fixed number of shares at a fixed price Correct
• B) Buying in the open market
• C) Repurchasing by direct negotiation

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Question: The share price of Winnipeg Auto Unlimited is $5 per share. There are 50 million shares outstanding, and Winnipeg has a book value of $900 million. What is the book value per share (BVPS) after the share repurchase of $10 million?

• A) $14.76
• B) $18.54
• C) $21.24

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Question: When a firm pays a cash dividend, the dividend payment is most likely to:

• A) cause financial leverage ratios to increase
• B) have no impact on financial leverage ratios and liquidity ratios Correct
• C) cause liquidity ratios to increase

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Question: The share price of Solar Automotive Industries is $50 per share. It has a book value of $500 million and 50 million shares outstanding. What is the book value per share (BVPS) after a share repurchase of $10 million?

• A) $10.12
• B) $10.00
• C) $9.84

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Question: Which type of cash dividend is most likely to be declared by a cyclical firm during good times?

• A) Stock dividend
• B) Special dividend Correct
• C) Liquidating dividend

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Question: In a world with taxes and brokerage costs:

• A) Modigliani and Miller say that dividend policy is relevant Correct
• B) dividend policy may be relevant
• C)

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Question: Grommetco produces plastic insulators for the electrical appliance industry. Excerpts from Grommetco's financial results for 2010 are as follows: Net Income (earnings) $10 Free Cash Flow to Equity $8 Dividends Paid $1 Stock Repurchases $3 Which of the following statements is most accurate? Grommetco's:

• A) FCFE coverage ratio is 2.0
• B) dividend coverage ratio is 2.5 Correct
• C) dividend payout ratio is 0.4

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Question: Which of the following statements about a stock repurchase is least accurate?

• A) Disgruntled stockholders are forced to sell their shares, improving management's position
• B) A stock repurchase occurs when a large block of stock is removed from the marketplace
• C) Management can distribute cash to shareholders at a favorable after-tax rate

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Question: Which justification for repurchasing stock is the least valid?

• A) Repurchases offer shareholders more choices than cash dividends
• B) Shareholders prefer capital gains to cash dividends Correct
• C) A cash dividend increase, in response to short-term excess cash flows, may confuse investors

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Question: Stock splits:

• A) increase firm value
• B) are less common than stock dividends Correct
• C) do not in and of themselves affect firm value

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Question: According to Modigliani and Miller's dividend irrelevancy theory, an investor in a firm that does not pay a dividend can still earn a "dividend" on that company by:

• A) selling a portion of the company's stock each year Correct
• B) slowly liquidating the fixed income portion of the investor’s portfolio
• C) writing covered call options on the underlying stock

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Question: Pants R Us Inc.'s Board of Directors is considering repurchasing $30,000,000 worth of common stock. Pants R Us assumes that the stock can be repurchased at the market price of $50 per share. After much discussion Pants R Us decides to borrow $30 million that it will use to repurchase shares. Pants R Us' Chief Investment Officer (CIO) has compiled the following information regarding the repurchase of the firm's common stock: Share price at the time of buyback = $50 Shares outstanding before buyback = 30,600,000 EPS before buyback = $3.33 Earnings yield = $3.33 / $50 = 6.7% After-tax cost of borrowing = 6.7% Planned buyback = 600,000 shares Based on the information above, what will be Pants R Us' earnings per share (EPS) after the repurchase of its common stock?

• A) $3.33
• B) $3.40
• C) $3.28

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Question: Which of the following statements about differences observed in payout trends in US and Europe is most accurate?

• A) A lower proportion of US companies pay dividends as compared to their European counterparts
• B) A higher proportion of US companies pay dividends as compared to their European counterparts
• C) The percentage of companies making stock repurchases has been trending downwards both in the US and Europe

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Question: At a recent conference, "Dividends − Are They Increasing?", several lecturers were discussing the signaling effect and their opinions on how changes in a company's dividend policy are often viewed by investors. Linda Travis, an equity analyst at Girthmore Capital Management and one of the guest lecturers at the conference, made the following observations: Observation 1: A dividend initiation is always viewed as a positive signal by investors. It is an indication that the company has so much cash at its disposal that it can afford to pay it out to shareholders. Observation 2: A dividend decrease is typically a positive signal by a company's management to its shareholders. It indicates that management has a variety of positive NPV projects in its capital budget and would like to finance as many of them as possible with retained earnings. With respect to Travis' observations:

• A) both are correct
• B) only one is correct
• C) both are incorrect

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Question: Which of the following is least likely to discourage a company from making high dividend payouts? The company's:

• A) shareholders are primarily tax-exempt institutions Correct
• B) flotation costs are high
• C) bondholders are protected by strong debt covenants

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Question: Which of the following would be least likely to prompt a decline in a company's overall payout ratio?

• A) A decrease in the capital gains tax rate
• B) A permanent decrease in company profitability Correct
• C) An increase in interest rates

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Question: Which of the following is most likely to prompt a company to increase dividend payments? A company's management foresees:

• A) an immediate lack of profitable investment opportunities
• B) reduced availability of credit in the market Correct
• C) continued volatility of the company's earnings

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Question: Global Development expects to earn $6 million next year. 40% of this amount, or $2.4 million, has been allocated for distribution to common shareholders. There are 2.4 million shares outstanding, and the market price is $30 a share. If Global uses the $2.4 million to repurchase shares at the current price of $30 per share, its share price after the repurchase will be closest to:

• A) $29.00
• B) $30.00
• C) $31.00

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Question: The share prices of Solar Automotive Industries and Winnipeg Auto Unlimited are both $50 per share, and each company has 50 million shares outstanding. On September 30, both companies announced a $10 million stock buyback. Solar has a book value of $500 million, while Winnipeg has a book value of $900 million. How much did the book value per share (BVPS) of each company increase or decrease after the share repurchase? Solar Automotive Industries Winnipeg Auto Unlimited

• A) Increase by $0.13 Increase by $0.16
• B) Decrease by $0.16 Decrease by $0.13
• C) Decrease by $0.13 Decrease by $0.13

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Question: The current stock price of Westkirk is $50.00 per share. Book value of equity is $200 million and 10 million shares are outstanding. If Westkirk repurchases $25 million of their stock, the change in book value per share after the repurchase is closest to a(n):

• A) increase of $1.10
• B) decrease of $2.50
• C) decrease of $1.60

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Question: International Pulp, a Swiss-based paper company, has annual pretax earnings (in Swiss francs) of SF 600. The corporate tax rate on retained earnings is 55%, and the corporate tax rate that applies to earnings paid out as dividends is 30%. Furthermore, International Pulp pays out 30% of its earnings as dividends, and the individual tax rate that applies to dividends is 40%. What is the effective tax rate on corporate earnings paid out as dividends?

• A) 48%
• B) 70%
• C) 58%

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Question: Sinclair Construction Company's Board of Directors is considering repurchasing $30,000,000 worth of common stock. Sinclair assumes that the stock can be repurchased at the market price of $50 per share. After much discussion Sinclair decides to borrow $30 million that it will use to repurchase shares. Sinclair's Chief Executive Officer (CEO) has compiled the following information regarding the repurchase of the firm's common stock: Share price at the time of buyback = $50 Shares outstanding before buyback = 30,600,000 EPS before buyback = $3.33 Earnings yield = $3.33 / $50 = 6.7% After-tax cost of borrowing = 8.0% Planned buyback = 600,000 shares Based on the information above, Sinclair's earnings per share (EPS) after the repurchase of its common stock will be closest to:

• A) $3.23
• B) $3.32
• C) $3.18

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Question: Dividend payments are most likely to be associated with:

• A) increased agency conflict between shareholders and managers Correct
• B) increased agency conflict between bondholders and shareholders
• C) increased agency conflict between bondholders and managers

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Question: Financial managers utilize stock splits and stock dividends because they perceive that:

• A) investors will double the share price if there is a 20% stock dividend Correct
• B) brokerage fees paid by shareholders will be reduced
• C) an optimal trading range exists

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Question: When a firm pays a stock dividend, the dividend is most likely to:

• A) cause financial leverage ratios to increase
• B) have no impact on financial leverage ratios and liquidity ratios Correct
• C) cause liquidity ratios to decrease

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Question: Which of the following would be least likely to help control the principal-agent relationship (PAR) problem?

• A) Fire employees who misbehave Correct
• B) Increase the asymmetry of information between the owners of the firm and the employees
• C) Alter the behavior of executives through goal setting

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Question: All of the following are examples of the principal-agent relationship (PAR) problem EXCEPT:

• A) an employee calls in sick to use up their sick time since they cannot carry it over to the next year
• B) two members of a board of directors are having an illicit relationship
• C) a senior executive routinely leaves the office early claiming to work from home yet there is no accountability

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Question: Regarding the process of evaluating ESG risk exposures and investment opportunities related to a company, it is least likely that ESG integration will be used in:

• A) fixed-income analysis to identify upside opportunities Correct
• B) equity analysis to identify downside risk
• C) fixed-income analysis to identify downside risk

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Question: In the process of identifying and evaluating ESG-related risk exposures and investment opportunities, there is greatest consistency across companies in considerations related to:

• A) environmental Correct
• B) social
• C) corporate governance

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Question: Which of the following least accurately describes one of the nontraditional "ESG" business factors that may be critical to a company's long-term sustainability?

• A) governance risk exposures Correct
• B) security risk exposures
• C) environmental risk exposures

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Question: CEO duality exists when the chief executive officer:

• A) also has a controlling interest in the firm
• B) is simultaneously realistic and optimistic
• C) also serves as chairperson of the board

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Question: The boards in a two-tier board of directors are most likely to be structured as a:

• A) executive board and a non-executive board Correct
• B) external board and an internal board
• C) supervisory board and a management board

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Question: The principal-agent problem can best be described as:

• A) the agent may act for the well-being of the principal rather than that of the stakeholders
• B) de C.V. (Evaluar). Hernández is responsible for covering eleven companies in the Consumer Staples industry. Hernandez reports to Jose Antonio Rodriguez, a senior analyst and partner with the firm. Although Rodriguez has for a long time been aware that corporate governance can have a significant impact on a firm's long-term performance, he has more recently become increasingly concerned with environmental and social factors, specifically how companies manage related resources and risk exposures. Rodriguez has noted that mismanagement of ESG factors has led to a number of widely reported corporate events that have had significant negative impacts on securities prices. In addition to focusing on corporate ownership structures and how these ownership structures may affect corporate governance outcomes, Rodriguez has asked Hernandez to also take into account ESG-related risks and opportunities that are relevant to security analysis. Rodriguez has asked Hernandez to begin incorporating environmental, social, and governance (ESG) considerations into her investment analyses, in order to provide a broader perspective on the risks and investment opportunities of the various companies' securities that she analyses
• C) the agent may act for his own well-being rather than that of the principal. Maria Guadalupe Hernandez is a securities analyst with Grupo Financiero Evaluar, S.A

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Question: Hernandez is most likely to encounter principal–agent problems when analyzing a company with an ownership structure that combines:

• A) dispersed ownership and concentrated voting power
• B) dispersed ownership and dispersed voting power Correct
• C) concentrated ownership and concentrated voting power

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Question: Hernandez is analyzing the securities of a company that has mutual business interests with another company. Two firms have cross-holding share arrangements with each other. Hernandez could best describe this structure as:

• A) horizontal ownership Correct
• B) pyramid ownership
• C) vertical ownership

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Question: Rodriguez points out to Hernandez that CEO duality is present in one of the firms that Hernandez is analyzing. It would be most accurate for Hernandez to describe CEO duality as the scenario where the chief executive officer also serves as the firm's:

• A) chief operating officer Correct
• B) chairperson
• C) president

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Question: A principal-agent problem may exist between:

• A) managers and directors
• B) regulators and directors
• C) shareholders and directors

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Question: Which of the following best describes the principal–agent problem? An example of the principal–agent problem is when:

• A) a lawyer recommends protracted legal proceedings to her client Correct
• B) a board of directors take advantage of their position at the expense of the shareholders
• C) owners of the firm gain at the expense of the employees

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Question: A company is most likely to have a high cost of capital if the firm has a low:

• A) total debt-to-EBITDA ratio
• B) interest coverage (IC) ratio Correct
• C) debt-to-equity (D/E) ratio

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Question: When attempting to build a risk premium into the required returns of stocks in a developing country, an analyst should use the:

• A) country’s weighted average cost of capital
• B) country spread model Correct
• C) modified Gordon Growth model

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Question: The equity risk premium is the difference between:

• A) estimated equity returns and estimated bond returns
• B) the estimated equity return and the risk-free return Correct
• C) the required equity return and the risk-free return

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Question: Currently the market index stands at 1,190.45. Firms in the index are expected to pay cumulative dividends of 35.71 over the coming year. The consensus 5-year earnings growth forecast for these firms is expected to increase to 6.2% up from last year's forecast of 4.5%. The long-term government bond is yielding 5.0%. According to the Gordon growth model, what is the equity risk premium?

• A) 4.2%
• B) 1.2%
• C) 2.5%

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Question: Candace Elwince is attempting to calculate the required return of Skeun Inc., a machine-tool manufacturer in a small Eastern European country. Elwince has solid data from the German market but is not sure how to account for the exchange-rate risk Skeun investors would face. Her best choice for creating a risk premium is the:

• A) Gordon Growth model Correct
• B) difference between the inflation rates of both markets
• C) difference between the bond yields of both markets

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Question: Estimates of historical ERP resulting from backfilling of index data is most likely to:

• A) bias the estimate upward Correct
• B) result in an unbiased estimate
• C) bias the estimate downward

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Question: Ben Jacobs, CFA, is attempting to calculate a historical equity risk premium. His first estimate uses geometric mean equity returns and long-term bond yields. His second estimate uses arithmetic mean returns and short-term bond yields. The effect of the changes in methodology in the second estimate, relative to the first, will:

• A) both increase the size of the risk premium Correct
• B) both decrease the size of the risk premium
• C) have offsetting effects

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Question: Types of estimates of the equity risk premium are least likely to include:

• A) extemporized estimates
• B) macroeconomic model estimates Correct
• C) ex-ante estimates. Sofie Johansen is a new financial analyst at Rikdom Investments. Johansen meets with her manager to discuss a possible investment in Helsevesen Health Care. Johansen's manager asks her to estimate the cost of common equity using the Fama-French five-factor model for Helsevesen as a first step in valuing Helsevesen. Johansen estimates Helsevesen's cost of equity by regressing Helsevesen's excess return on relevant risk factors using past 120-month returns. The resulting factor betas and risk premiums are shown in Factor Betas and Risk Premiums

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Question: Helsevesen's cost of common equity using the Fama-French five-factor model is closest to:

• A) 10.3%
• B) 12.3%
• C) 8.3%

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Question: Helsevesen's cost of common equity using the bond yield plus risk premium (BYPRP) model is closest to:

• A) 8.3%
• B) 10.3%
• C) 12.3%

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Question: Using the Grinold-Kroner model, the estimated ERP for Yukon is closest to:

• A) 2.65%
• B) 3.15%
• C) 7.65%

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Question: If a company's debt is publicly traded, the most appropriate estimate of its cost of debt can be derived from:

• A) matrix pricing, based on the yields on traded securities with the same maturity and credit ratings
• B) an inferred credit rating on the debt based on the financial ratios of the company
• C) the yield to maturity for the firm’s longest-maturity straight debt outstanding

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Question: In the process of estimating beta for a private company, unlevering the beta calculated for the publicly traded comparable company accomplishes what goal?

• A) Establishing a baseline level of leverage Correct
• B) Improving the accuracy of the estimate in the event that the private company’s debt is of low quality
• C) Isolating market risk

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Question: Bottom-up factors that affect a company's cost of capital are most likely to include:

• A) asset nature and liquidity
• B) capital availability and market conditions Correct
• C) legal and regulatory considerations and tax jurisdiction

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Question: An analyst attempting to derive the equity risk premium for a stock starting from the required return for that stock would find which of the following statistics least useful?

• A) The stock’s beta
• B) The stock’s estimated return Correct
• C) Historical 10-year Treasury bond rates

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Question: The first step in evaluation of an announced corporate transaction is:

• A) preliminary valuation Correct
• B) the gathering of data
• C) initial evaluation

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Question: Kavi Biswas, CFA, makes the following statements: Statement 1: Empirical studies suggest that corporate transactions taken during stronger economic times tend to create more value. Statement 2: Corporate transactions tend to be cyclical, increasing in prevalence during economic expansions and decreasing during contractions. Which statement is correct?

• A) Statement 1 only Correct
• B) Statement 2 only
• C) Neither statement is correct. Simon Gracier follows Company P. On December 31, 20x2, Company P made an offer to acquire 100% of Company S's outstanding shares for a purchase price of €175 million—€122 million is financed by senior unsecured debentures with a yield of 6.5%, and the remaining is in stock based on the €52 per share current market price of Company P. Pre-acquisition financial statements are presented in Financial Statements (€ thousands) for the Year Ended December 31, 20X2 . Financial Statements (€ thousands) for the Year Ended December 31, 20X2 Balance Sheet Company P Company S

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Question: Which of the following statements about Company P's WACC is most accurate?

• A) Weights of debt and equity are calculated using most recent book values, and include any financing raised or additional equity issued
• B) The cost of debt will depend on the historical cost of debt of Company P only
• C) Several factors influence the cost of debt: profitability, volatility of EBITDA, leverage, collateral, and so on

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Question: Which of the following is the best estimate of the value of equity of Company S, using the comparable company analysis?

• A) €160,415,000
• B) €151,153,000
• C) €171,876,000

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Question: An analyst is writing a report on the impact of an announced divestment by Ziglair, Inc. The transaction calls for sale of Ziglair's foreign subsidiary. She makes the following two statements in the report: Statement 1: One approach is to use a multiple such as EV-to-EBITDA ratio or EV- to-sales ratio to value the various segments of a business and then compare the sum of the values to the conglomerate EV to determine the reasonableness of the transaction. Statement 2: Unlike sales, spinoffs do not generate sale proceeds; hence, they are easier to model. Which statement is correct?

• A) Both statements are correct Correct
• B) Statement 1 only
• C) Statement 2 only

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Question: Which corporate transaction is most likely in response to compliance with regulatory requirements?

• A) Restructuring
• B) Investment
• C) Divestment

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Question: Peter Small, CFA, makes the following statements: Statement 1: In an opportunistic restructuring, a business changes its balance sheet composition, cuts costs, or alters its business model to improve the return on capital. Statement 2: Moderate- to large-sized business units sought by several potential acquirers might be expected to be spun off as opposed to sold. Which statement is correct?

• A) Neither statement is correct Correct
• B) Statement 2 only
• C) Statement 1 only

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Question: Petra Zimuth, CFA, is analyzing an announced acquisition. Under the terms, Apollo, Inc., is to be taken over by Bastille, Inc., at a price of $65 per share. Last week, Apollo stock was trading at a price of $48 and increased to $55 in anticipation of the announcement. The offer premium is closest to:

• A) 35%
• B) 18%
• C) 44%

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Question: Which of the following is least likely an advantage of comparable company analysis?

• A) The approach does not assume that the market’s valuation of the comparable companies is fair
• B) Estimates of value are derived directly from the market rather than assumptions and estimates about the future
• C) Data for comparable companies is easy to access

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Question: Which of the following statements about materiality is least accurate?

• A) Cost restructuring may be evaluated as estimated savings as a percentage of sales
• B) Materiality is evaluated based on transaction size and fit
• C) The divestment of an unrelated business for a company that had previously been diversifying into such businesses is immaterial

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Question: Which of the following is least likely a disadvantage of comparable transaction analysis (CTA)?

• A) Historical transactions may have occurred under different conditions Correct
• B) Estimates of value are derived directly from recent prices for actual deals completed in the marketplace
• C) The CTA approach implicitly assumes that the M&A market valued past transactions appropriately

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