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A disadvantage of the free cash flow valuation method is a

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1. A disadvantage of the free cash flow valuation method is
   a.
   The terminal value tends to dominate the total value in many cases.
   b.
   The projection of free cash flows depends on earnings estimates.
   c.
   The free cash flow method is not rigorous.
   d.
   The free cash flow method is not used widely in practice.
2. Continuing free cash flows represent
   a.
   the cash flows remaining after deducting cash flows attributable to debt holders
   b.
   the free cash flows after the point at which the firm has settled into a long-run steady-state growth rate.
   c.
   all sustainable free cash flows
   d.
   all after-tax free cash flows
3. Steady-state growth in free cash flows could be driven by long-run expectations for growth attributable to
   a.
   interest rates
   b.
   national exports
   c.
   general economic productivity
   d.
   balance of payments
4. Financial assets include all of the following except
   a.
   Excess cash
   b.
   short term investments
   c.
   intangible assets
   d.
   long trm investments
5. Financial liabilities include all of the following except
   a.
   mortgages payable
   b.
   current maturities of long term debt
   c.
   accrued taxes
   d.
   bonds payable
6. All of the following are logical steps that enable the analyst to determine reliable estimates of value except:
   a.
   understand the economics of the industry
   b.
   assess the particular firm's strategy
   c.
   evaluate the quality of the firm's accounting
   d.
   derive a single point estimate of value for a share's current price
7. Nonsystematic risk factors would include all of the following except:
   a.
   the sustainability of the firm's strategy
   b.
   the firm's ability to generate revenue growth
   c.
   the firm's ability to control expenses
   d.
   unemployment levels
8. An equity security with systematic risk equal to the average amount of systematic risk of all equity securities in the market
   a.
   has a market beta equal to one.
   b.
   should expect to earn the same rate of return as the average stock in the market portfolio.
   c.
   gives no insight into the risk premium of stock.
   d.
   Both a and b are correct.
9. Free cash flows for common equity shareholders are the cash flows specifically available to the common shareholders after making all capital expenditures, _____________________________________________ and ____________________________________________________________.
10. The risk-adjusted discount rate used to compute the present value of all the projected free cash flows for common equity shareholders equals the _______________________________________________________.