AIFA AIFA Quantitative Methods & Financial Modeling 2

Question 1

A company's EBITDA is $5 million and its total enterprise value is $30 million. What is the EV/EBITDA multiple?

Accepted Answer

6.0x

Answer

4.0x

Answer

5.0x

Answer

7.5x

Question 2

In regression analysis, what does the R-squared (R²) value represent?

Accepted Answer

The proportion of variance in the dependent variable explained by the independent variable(s)

Answer

The slope of the regression line

Answer

The standard error of the regression

Answer

The correlation between residuals and fitted values

Question 3

What is the primary purpose of sensitivity analysis in financial modeling?

Accepted Answer

To test how changes in key assumptions affect the model output

Answer

To calculate the exact future value of an investment

Answer

To determine the optimal capital structure

Answer

To estimate the cost of equity using beta

Question 4

A project has an NPV of $0 when discounted at 12%. What does this tell you about the project's internal rate of return (IRR)?

Accepted Answer

The IRR equals 12%

Answer

The IRR is less than 12%

Answer

The IRR is greater than 12%

Answer

The IRR cannot be determined from NPV alone

Question 5

Which valuation approach determines value by analyzing the prices paid for comparable companies in recent merger and acquisition transactions?

Accepted Answer

Precedent transaction analysis

Answer

Discounted Cash Flow (DCF) analysis

Answer

Comparable company analysis (trading comps)

Answer

Liquidation value analysis

Question 6

Which type of financial ratio measures how quickly a company converts its assets into revenue?

Accepted Answer

Activity (efficiency) ratio

Answer

Liquidity ratio

Answer

Profitability ratio

Answer

Leverage ratio