Equity Investments - Equity Investments Section 2

Avatto>>CFA Level 1>>PRACTICE QUESTIONS>>Equity Investments>>Equity Investments Section 2

1. As compared to public equity markets, operating in the private market:

  • Option : A
  • Explanation : Public firms are under pressure from shareholders to meet shorter-term demands. Compared to this, private firms are better able to focus on longer-term value creation opportunities.
Cancel reply
Cancel reply

2. The most likely candidates for a management buyout (MBO) are firms with:

  • Option : C
  • Explanation : Firms with (1) large amounts of undervalued assets which can be sold to reduce debt; and (2) that generate high levels of cash flows which can be used to make interest and principal payments on the debt are most likely candidates for management buyout transactions.
Cancel reply
Cancel reply