Question 1

Do managers respond to increases in transparency by other firms and/or increases in the demands for transparency from investors?

Accepted Answer

A) No,managers do not respond to either. 
B) Yes,managers respond positively to both. 
C) Managers respond only to demands from investors but not to increases in the transparency of other firms. 
D) Managers respond only to increases in the transparency of other firms but not to demands from investors. 
A) No,managers do not respond to either. 
B) Yes,managers respond positively to both. 
C) Managers respond only to demands from investors but not to increases in the transparency of other firms. 
D) Managers respond only to increases in the transparency of other firms but not to demands from investors. B

Question 2

Which of the following is NOT a way that managers of most companies could improve their communication to investors?

Accepted Answer

A) Increase their understanding of their investor base. 
B) Respond more actively to analysts' comments and the changing P/E ratio of the firm. 
C) Tailor communications to the investors that matter most in determining share price. 
D) Engage in a systematic analysis to determine if there really is a material discrepancy between their company's intrinsic value and its market value. 
A) Increase their understanding of their investor base. 
B) Respond more actively to analysts' comments and the changing P/E ratio of the firm. 
C) Tailor communications to the investors that matter most in determining share price. 
D) Engage in a systematic analysis to determine if there really is a material discrepancy between their company's intrinsic value and its market value. B

Question 3

Which of the following are true about intrinsic investors?
I.They are sophisticated.
II.They want transparency about results.
III.They want management's candid assessment of the company's performance.
IV.Their role in determining stock prices is not important enough for management to accommodate their preferences.

Accepted Answer

A) I and II only. 
B) I and III only. 
C) I,II,and III only. 
D) II,III,and IV only. 
A) I and II only. 
B) I and III only. 
C) I,II,and III only. 
D) II,III,and IV only. C

Question 4

Which of the following is true with respect to earnings guidance?

Accepted Answer

A) There is usually a change in total returns to shareholders in the first year that managers begin to offer earnings guidance. 
B) It has been proven that earnings guidance can increase liquidity. 
C) Firms that engage in earnings guidance have higher multiples such as enterprise value/EBITA. 
D) When a company begins to issue earnings guidance,it does not change the likelihood of higher or lower volatility in its share price relative to companies that do not issue earnings guidance. 
A) There is usually a change in total returns to shareholders in the first year that managers begin to offer earnings guidance. 
B) It has been proven that earnings guidance can increase liquidity. 
C) Firms that engage in earnings guidance have higher multiples such as enterprise value/EBITA. 
D) When a company begins to issue earnings guidance,it does not change the likelihood of higher or lower volatility in its share price relative to companies that do not issue earnings guidance.

Question 5

In comparing growth versus value stocks,which of the following is NOT true?

Accepted Answer

A) Most stocks labeled as growth stocks have higher ROICs. 
B) Most managers would like their firms to be growth stocks. 
C) Growth stocks are usually stocks that have higher book and earnings multiples. 
D) Most stocks labeled as growth stocks grow earnings and revenues faster than value stocks. 
A) Most stocks labeled as growth stocks have higher ROICs. 
B) Most managers would like their firms to be growth stocks. 
C) Growth stocks are usually stocks that have higher book and earnings multiples. 
D) Most stocks labeled as growth stocks grow earnings and revenues faster than value stocks.

Question 6

In most industries,there is a fairly standardized level of transparency across firms.

Accepted Answer

A) True 
 B)False

Question 7

Executives would do a better service to investors by providing guidance at the start of the financial year on the real short-,medium-,and long-term value drivers of their businesses,as opposed to guidance on earnings per share (EPS).

Accepted Answer

A) True 
 B)False

Question 8

The objective of investor relations should be the alignment of share price and intrinsic value.It should not focus on trying to maximize the share price.

Accepted Answer

A) True 
 B)False

Question 9

With respect to the type of information managers should reveal,which of the following is/are true?
I.Managers should provide specific point goals rather than ranges.
II.Multinational companies should discuss their targets using constant currency rates.
III.Managers across industries should strive to provide information on a common set of value drivers.
IV.Managers of conglomerates should reveal aggregate numbers rather than business-by-business numbers.

Accepted Answer

A) I and II only. 
B) II and III only. 
C) II only. 
D) III and IV only. 
A) I and II only. 
B) II and III only. 
C) II only. 
D) III and IV only.

Question 10

Describe the basic goal of good investor communications.

Accepted Answer

The goal is to supply investors with inf

Exam 30: Investor Communications

Do managers respond to increases in transparency by other firms and/or increases in the demands for transparency from investors?

Which of the following is NOT a way that managers of most companies could improve their communication to investors?

Which of the following is true with respect to earnings guidance?

In comparing growth versus value stocks,which of the following is NOT true?

In most industries,there is a fairly standardized level of transparency across firms.

Executives would do a better service to investors by providing guidance at the start of the financial year on the real short-,medium-,and long-term value drivers of their businesses,as opposed to guidance on earnings per share (EPS).

The objective of investor relations should be the alignment of share price and intrinsic value.It should not focus on trying to maximize the share price.

Describe the basic goal of good investor communications.

Why Value Value

Fundamental Principles of Value Creation

Conservation of Value and the Role of Risk

The Alchemy of Stock Market Performance

The Stock Market Is Smarter Than You Think

Return on Invested Capital

Growth

Frameworks for Valuation

Reorganizing the Financial Statements

Analyzing Performance

Forecasting Performance

Estimating Continuing Value

Estimating the Cost of Capital

Moving From Enterprise Value to Value Per Share

Analyzing the Results

Using Multiples

Valuation by Parts

Taxes

Non-operating Items, Provisions, and Reserves

Leases and Retirement Obligations

Alternative Ways to Measure Return on Capital

Inflation

Cross-Border Valuation

Case Study: Heineken

Corporate Portfolio Strategy

Performance Management

Mergers and Acquisitions

Divestitures

Capital Structure, Dividends, and Share Repurchases

Emerging Markets

Valuing High-Growth Companies

Cyclical Companies

Banks

Flexibility

Filters