CHAPTER 7 QUIZ 31 TO 35
31. Valuation models using average price ratios and 10-year averages can be more
useful with cyclical companies because these variables are more stable
32. Every valuation method has its limitations
33. As inflation increases, the required rate of return on common stocks falls as well as
the prices.
34. Economic Value Added is based on the concept that decisions should only be made
on projects accepted only if net operating profit after taxes exceeds the expected
cost to finance the project
35. Hidden assets refer to assets that are not readily apparent to investors in a
traditional sense, but add substantial value to the firm.
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