"Equity Investments":Return on equity
学习是一个不断积累的过程，每天学习一点，每天进步一点！为了帮助大家更高效地备考2021年CFA考试，正保会计网校每日为大家上新CFA习题供大家练习。让网校与您一起高效备考2021年CFA考试，梦想成真！
Questions 1:
A group of analysts estimate a security’s mean expected value to be $98.00 with a standard deviation of $0.55. Using a confidence interval of plus or minus two standard deviations and given the security is trading at $97.50, the security appears to be:
A、 undervalued.
B、 fairy valued.
C、 overvalued.
Questions 2:
A company has initiated the process of selling unproductive land, representing 5% of its total assets, and using the proceeds to buy back its common shares. Holding other factors constant, these actions by the company will most likelyresult in a:
A、 lower sustainable growth.
B、 higher return on equity.
C、 higher operating margin.
B is correct. The confidence interval of the security is between $96.90 ($98 – 2 × $0.55) and $99.10 ($98 + 2 × $0.55). The security price of $97.50 is within the confidence interval so it is fairly valued.
A is incorrect. The confidence interval of the security is between $96.90 ($98 – 2 × $0.55) and $99.10 ($98 + 2 × $0.55). The security price of $97.50 is within the confidence interval so it is fairly valued.
C is incorrect. The confidence interval of the security is between $96.90 ($98 – 2 × $0.55) and $99.10 ($98 + 2 × $0.55). The security price of $97.50 is within the confidence interval so it is fairly valued.
B is correct. Share buyback reduces equity, holding other factors (e.g., earnings) constant, thus return on equity will be higher.
C is incorrect. Selling unproductive land will not impact the operating profit and, holding sales constant, there would be no effect on operating margin.
A is incorrect. With higher ROE, holding the retention ratio constant, the sustainable growth would be higher, not lower.
成功=时间+方法，自制力是这个等式的保障。世上无天才，高手都是来自刻苦的练习。而人们经常只看到“牛人”闪耀的成绩，其成绩背后无比寂寞的勤奋。小编相信，每天都在勤奋练习，即使是一点点的进步，大家一定可以成为人人称赞的“牛人”。
