Which of the following statement is incorrect about Z-SCORE?

A The Z indicate the relative likehood of firm not going to bankrupt

B The higher of Z score means the firm is less likely to go bankrupt

C The weight are calculated to maximize the difference in Z scores within bankrupt or non bankrupt groups

D The weight are calculated to maximize the difference in Z score between groups

Which of the statement is correct?

A The capital assets pricing model states that the only diversifable that has to borne is the risk in the market as a whole

B All statement are correct

C capital assets pricing model requires estimate beta which can be accurately done by running regression analysis

D Fundamental risk is the risk that an investor bears as a result of the way a firm conducts its activities

E All statement are incorrect

F Prodit risk is the risk of profit margins changing for a given level of total assets

Which of the flowing statement is incorrect”?

A If firms issue debt to finance the growth or liquidate financial assets no growth in equity occurs.

B A trailing P/E can be high because current earning are temporaily low even though expected indicate the P/E should otherwise be low

C All statement are correct

D A firm with a high p/e and a low P/B is one where residual earning are expected to increase from the current level but are expected to be lower than zero

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