Question 1

The analysis of the determinants of firm value is called ________.

Accepted Answer

A)  fundamental analysis
B)  technical analysis
C)  momentum analysis
D)  indexingE) C) and D)
F) B) and D)

Question 2

Attempting to forecast future earnings and dividends is consistent with which of the following approaches to securities analysis?

Accepted Answer

A)  Technical analysis
B)  Fundamental analysis
C)  Both technical analysis and fundamental analysis
D)  IndexingE) A) and B)
F) All of the above

Question 3

Firm B produces gadgets. The price of gadgets is $2 each. Firm B has total fixed costs of $300 000 and variable costs of $1.40 per gadget. The corporate tax rate is 30%. If the economy is strong, the firm will sell 2 000 000 gadgets. If the economy enters a recession it will sell only half as many gadgets. If the economy is strong, the after-tax profit of Firm B will be ________.

Accepted Answer

A)  $90 000
B)  $210 000
C)  $300 000
D)  $630 000E) C) and D)
F) B) and C)

Question 4

Portfolio manager Peter Lynch would classify Coca-Cola as ________.

Accepted Answer

A)  an asset play
B)  a slow grower
C)  a stalwart
D)  a turnaroundE) B) and D)
F) All of the above

Question 5

Which of the following is the rate at which the general level of prices for goods and services is rising?

Accepted Answer

A)  The exchange rate
B)  The gross domestic product growth rate
C)  The inflation rate
D)  The real interest rateE) B) and D)
F) None of the above

Question 6

Which of the following describes the rate at which your ability to purchase grows while you hold an interest-earning investment?

Accepted Answer

A)  The nominal exchange rate
B)  The nominal interest rate
C)  The real exchange rate
D)  The real interest rateE) A) and B)
F) None of the above

Question 7

Which one of the following is not a US supply shock?

Accepted Answer

A)  Unions force an increase in national wage rates
B)  30% drop in oil supply from the Middle East
C)  Extended droughts reduce US food production by 25%
D)  Increases in Chinese purchases of US exportsE) A) and B)
F) None of the above

Question 8

You would expect the beta of cyclical industries to be ________ and the beta of defensive industries to be ________.

Accepted Answer

A)  greater than 1; less than 1
B)  less than 1; less than 1
C)  less than 1; greater than 1
D)  greater than 1; greater than 1E) B) and C)
F) A) and B)

Question 9

If the economy is going into a recession, a good industry to invest in would be the ________ industry.

Accepted Answer

A)  automobile
B)  banking
C)  construction
D)  medical servicesE) None of the above
F) A) and C)

Question 10

Which of the following would not be considered a supply shock?

Accepted Answer

A)  A change in the price of imported oil
B)  Frost damage to the orange crop
C)  A change in the level of education of the average worker
D)  An increase in the level of government spendingE) All of the above
F) A) and C)

Question 11

Everything else equal, if you expect a larger interest rate increase than other market participants, you should ________.

Accepted Answer

A)  buy long-term bonds
B)  buy short-term bonds
C)  buy common shares
D)  buy preferred sharesE) A) and C)
F) B) and C)

Question 12

If you believe the economy is about to go into a recession you might change your asset allocation by selling ________ and buying ________.

Accepted Answer

A)  growth shares; long-term bonds
B)  long-term bonds; growth shares
C)  defensive shares; growth shares
D)  defensive shares; long-term bondsE) B) and D)
F) C) and D)

Question 13

The most widely used monetary policy tool is ________.

Accepted Answer

A)  altering the discount rate
B)  altering reserve requirements
C)  open market operations
D)  increasing the budget deficitE) All of the above
F) C) and D)

Question 14

To obtain an approximate estimate of the real interest rate, one must ________ the nominal risk-free rate.

Accepted Answer

A)  add the default premium to
B)  subtract the default premium from
C)  add the expected inflation to
D)  subtract the expected inflation fromE) A) and D)
F) None of the above

Question 15

You estimate that the present value of a firm's cash flow is $15 million. The break-up value of the firm if you were to sell the major assets and divisions separately would give $20 million. This is an example of what Peter Lynch would call a/an ________.

Accepted Answer

A)  stalwart
B)  slow growth
C)  star
D)  asset playE) B) and D)
F) B) and C)

Question 16

Which one of the following is probably the most direct and immediate way to stimulate or slow the economy, although it is not very useful for fine-tuning economic performance?

Accepted Answer

A)  Fiscal policy
B)  Monetary policy
C)  Supply-side policy
D)  Rising minimum wagesE) B) and D)
F) A) and D)

Question 17

GDP refers to ________.

Accepted Answer

A)  the amount of personal disposable income in the economy
B)  the difference between government spending and government revenues
C)  the total manufacturing output in the economy
D)  the total production of goods and services in the economyE) B) and D)
F) All of the above

Question 18

A firm in the early stages of its industry life cycle will likely have ________.

Accepted Answer

A)  low dividend payout rates
B)  low rates of investment
C)  low rates of return on investment
D)  low R&D spendingE) C) and D)
F) A) and C)

Exam 12: Macroeconomic and Industry Analysis

Portfolio manager Peter Lynch would classify Coca-Cola as ________.

Correct Answer
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Correct Answer
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A firm in the early stages of its industry life cycle will likely have ________.

Correct Answer
verified

Attempting to forecast future earnings and dividends is consistent with which of the following approaches to securities analysis?

Correct Answer
verified

Which one of the following is probably the most direct and immediate way to stimulate or slow the economy, although it is not very useful for fine-tuning economic performance?

Correct Answer
verified

You would expect the beta of cyclical industries to be and the beta of defensive industries to be .

Correct Answer
verified

The most widely used monetary policy tool is ________.

Correct Answer
verified

Which of the following describes the rate at which your ability to purchase grows while you hold an interest-earning investment?

Correct Answer
verified

To obtain an approximate estimate of the real interest rate, one must ________ the nominal risk-free rate.

Correct Answer
verified

GDP refers to ________.

Correct Answer
verified

Everything else equal, if you expect a larger interest rate increase than other market participants, you should ________.

Correct Answer
verified

If the economy is going into a recession, a good industry to invest in would be the ________ industry.

Correct Answer
verified

The analysis of the determinants of firm value is called ________.

Correct Answer
verified

You estimate that the present value of a firm's cash flow is $15 million. The break-up value of the firm if you were to sell the major assets and divisions separately would give $20 million. This is an example of what Peter Lynch would call a/an ________.

Correct Answer
verified

Which of the following is the rate at which the general level of prices for goods and services is rising?

Correct Answer
verified

If you believe the economy is about to go into a recession you might change your asset allocation by selling and buying .

Correct Answer
verified

Which one of the following is not a US supply shock?

Correct Answer
verified

Which of the following would not be considered a supply shock?

Correct Answer
verified

Exam 12: Macroeconomic and Industry Analysis

Portfolio manager Peter Lynch would classify Coca-Cola as ________.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A firm in the early stages of its industry life cycle will likely have ________.

Correct AnswerverifiedShow Answer

Attempting to forecast future earnings and dividends is consistent with which of the following approaches to securities analysis?

Correct AnswerverifiedShow Answer

Which one of the following is probably the most direct and immediate way to stimulate or slow the economy, although it is not very useful for fine-tuning economic performance?

Correct AnswerverifiedShow Answer

You would expect the beta of cyclical industries to be ________ and the beta of defensive industries to be ________.

Correct AnswerverifiedShow Answer

The most widely used monetary policy tool is ________.

Correct AnswerverifiedShow Answer

Which of the following describes the rate at which your ability to purchase grows while you hold an interest-earning investment?

Correct AnswerverifiedShow Answer

To obtain an approximate estimate of the real interest rate, one must ________ the nominal risk-free rate.

Correct AnswerverifiedShow Answer

GDP refers to ________.

Correct AnswerverifiedShow Answer

Everything else equal, if you expect a larger interest rate increase than other market participants, you should ________.

Correct AnswerverifiedShow Answer

If the economy is going into a recession, a good industry to invest in would be the ________ industry.

Correct AnswerverifiedShow Answer

The analysis of the determinants of firm value is called ________.

Correct AnswerverifiedShow Answer

You estimate that the present value of a firm's cash flow is $15 million. The break-up value of the firm if you were to sell the major assets and divisions separately would give $20 million. This is an example of what Peter Lynch would call a/an ________.

Correct AnswerverifiedShow Answer

Which of the following is the rate at which the general level of prices for goods and services is rising?

Correct AnswerverifiedShow Answer

If you believe the economy is about to go into a recession you might change your asset allocation by selling ________ and buying ________.

Correct AnswerverifiedShow Answer

Which one of the following is not a US supply shock?

Correct AnswerverifiedShow Answer

Which of the following would not be considered a supply shock?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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You would expect the beta of cyclical industries to be and the beta of defensive industries to be .

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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If you believe the economy is about to go into a recession you might change your asset allocation by selling and buying .

Correct Answer
verified

Correct Answer
verified

Correct Answer
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