CFA Practice Question

There are 201 practice questions for this study session.

CFA Practice Question

The types of stocks or investment problems for which an analyst could appropriate use P/B in valuation are:

I. The company is not expected to continue as a going concern.
II. The company is composed mainly of liquid assets.
III. The company's EPS is highly variable.
IV. The company's EPS is negative.
Correct Answer: I, II, III and IV

I. When a company is likely to be liquidated (so that cash flow and earnings are not relevant), the value of its assets less its liabilities is of utmost importance. Naturally, the analyst must establish the fair value of these assets.

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