Question

107)

How does an equity research report differ from what you might see in a hedge fund or asset management stock pitch?

a) Equity research analysts tend to forecast a “target stock price” instead of giving a wide range of possible intrinsic values for the company.

b) There is often significantly more industry data in equity research reports, especially in initiating coverage reports.

c) While hedge fund stock pitches could be either “long” or “short” recommendations, equity research reports only recommend stocks (i.e., “buy” recommendations).

d) There is not as much of a formalized investment thesis in most equity research (i.e., risk factors, mitigants, and catalysts won’t necessarily be stated explicitly).

e) Both hedge fund stock pitches and equity research reports tend to be far more critical of companies than investment banking advisory presentations or pitch books

109)

Which of the following can a buyer use to purchase a seller?

a) Cash.

b) New debt issued.

c) The buyer’s existing debt.

d) New stock issued.

e) Existing stock owned by institutional shareholders.

119)

Suppose that a consumer retail acquirer completes an acquisition, and that it uses debt to fund the majority of the acquisition price. In the year after the deal closes, however, the seller’s financial performance deteriorates and the buyer feels its leverage and coverage ratios are too high.

Which of the following strategies could the buyer pursue in the post-acquisition period to repay debt more quickly, without making the deal more dilutive to its EPS?

a) Reduce dividends.

b) Change the treatment of Integration Costs and expense them on the Income Statement rather than recognizing them only on the Cash Flow Statement.

c) Issue additional stock to repay debt.

d) Reduce CapEx spending.

e) Sell some of its stores and use the proceeds to repay debt.

Answer 1

Question 107

The Correct answer is :

i) Equity research analysts tend to forecast a "target stock price" instead of giving a wide range of possible intrinsic values for the company.

ii) There is often significantly more industry data in equity research reports, especially in initiating coverage reports.

iii) There is not as much of a formalized investment thesis in most equity research (i.e., risk factors, mitigants, and catalysts won't necessarily be stated explicitly).

Question 109

The Correct answer is :

i) Cash

ii) New debt issued.

iii) New stock issued.

Question 119

The Correct answer is :

i) Reduce dividends.

ii) Reduce CapEx spending.