- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 47. Fundamentals of Credit Analysis
- Subject 6. Special Considerations of High-Yield, Sovereign, and Municipal Analysis
CFA Practice Question
What is an issuer's enterprise value?
B. Market value of (common stock + preferred stock + of debt) - (cash and investments)
C. Market value of total equity - market value of total debt
A. Market value of total equity + market value of total debt
B. Market value of (common stock + preferred stock + of debt) - (cash and investments)
C. Market value of total equity - market value of total debt
Correct Answer: B
Enterprise value (EV) is total company value minus the value of cash and investments. It shows how much a company is worth because an acquirer would have to pay off/assume the debt and receive the cash/investment portion.
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