FM — Certificate in Financial Modelling Equity Practice Questions
The free FM — Certificate in Financial Modelling questions that deal with equity, with answers and explanations. The full bank and the timed practice test cover every topic the exam asks about.
Question #2
2. A startup requires $500,000 in funding. The investors ask for a 20% equity stake. What is the implied valuation of the startup?
Correct answer: C
Explanation
Valuation = Investment / Equity stake = $500,000 / 0.20 = $2.5 million.
Question #10
11. If a company has a net income of $150,000 and total equity of $600,000, what is its Return on Equity (ROE)?
Correct answer: A
Explanation
ROE = Net Income / Total Equity = $150,000 / $600,000 = 25%.
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