CFA 2026 Level II Vignettes Corporate Finance Business Valuation Free Quiz 1

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CFA 2026 Level II Vignettes Corporate Finance Business Valuation Free Quiz 1

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CFA 2026 Level II Vignettes Corporate Finance Business Valuation Free Quiz 1

Practice CFA 2026 Level II Vignettes Corporate Finance MCQs from Business Valuation. Get instant results with Explanation.

General10 MCQs

1. Vignette 1: Business Valuation - Case Study: An analyst is valuing a company. What are the three main valuation approaches?

A. Only the DCF approach is usedB. Only the market approach is usedC. The three approaches are income, market, and asset-basedD. Only the asset-based approach is used

2. What is the income approach to valuation?

A. DCF is the primary income approach, discounting future cash flows at the WACCB. DCF uses historical cash flowsC. DCF does not consider the cost of capitalD. DCF is the same as the market approach

3. What is the market approach to valuation?

A. The market approach uses the company's book valueB. The market approach uses discounted cash flowsC. The market approach is not used in practiceD. The market approach uses comparable company or transaction multiples

4. What is the asset-based approach to valuation?

A. The asset-based approach is always the most accurateB. The asset-based approach values the company based on its net assets (book or liquidation value)C. The asset-based approach uses discounted cash flowsD. The asset-based approach is not used for operating companies

5. How does an analyst choose a valuation approach?

A. The same approach should be used for all companiesB. The asset-based approach is always the best for all companiesC. The valuation approach depends on the company's characteristics and the purpose of the valuationD. Only the DCF approach should be used for all companies

General10 MCQs

6. Vignette 2: Business Valuation - Case Study: An analyst is performing a DCF valuation. What is the appropriate discount rate for FCFF and FCFE?

A. FCFF is discounted at the cost of equityB. FCFE is discounted at the WACCC. FCFE and FCFF are the sameD. FCFF is discounted at WACC; FCFE at cost of equity

7. What is the terminal value in a DCF and how is it calculated?

A. Terminal value can be calculated using the Gordon Growth Model or exit multiple approachB. Terminal value is the same as the book valueC. Terminal value is only calculated using the liquidation valueD. Terminal value is not needed in a DCF

8. What is the formula for terminal value using the Gordon Growth Model?

A. TV = FCF × (WACC – g) / (1+g)B. TV = FCF × (1+g) / (WACC – g)C. TV = FCF / (WACC + g)D. TV = FCF × (1-g) / (WACC + g)

9. What is the typical length of the explicit forecast period in a DCF?

A. The explicit forecast period is always 5 yearsB. The explicit forecast period is not importantC. The explicit forecast period depends on the company's growth and forecasting horizonD. The explicit forecast period is always 10 years

10. Why is sensitivity analysis important in DCF valuation?

A. Sensitivity analysis is not needed for DCFB. DCF results are not sensitive to inputsC. Only the terminal value is sensitive to inputsD. DCF is sensitive to assumptions, and sensitivity analysis helps assess the range of values

📋 CFA - Test Online Practice Quizzes

CFA

Conducting Body: CFA Institute

Frequency: 4 times a year (February, May, August, November) | Time: 135 Minutes

Negative Marking: No

⚡ Test Pattern (Total: 90 MCQs):

Alternative Investments: 8 MCQs
Corporate Issuers: 7 MCQs
Derivatives: 5 MCQs
Economics: 7 MCQs
Equity Investments: 12 MCQs
Ethics: 16 MCQs
Financial Statement Analysis: 11 MCQs
Fixed Income: 11 MCQs
Portfolio Management: 9 MCQs
Quant Methods: 6 MCQs

Merit Formula: -

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