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Exam 12: Macroeconomic and Industry Analysis

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Question 31

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Which of the following affects a firm's sensitivity of its earnings to the business cycle? I. Financial leverage II. Operating leverage III. Type of product

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

E) B) and C)
F) A) and D)

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Question 32

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Assume that the Federal Reserve increases the money supply. This will cause: I. Interest rates to decrease II. Consumption and investment to decrease III. Inflation to fall

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

E) A) and C)
F) A) and B)

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Question 33

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An expanding economy requires more workers. If the supply of workers becomes inadequate to meet the demand, what is the likely impact on the economy?

The decline in the value of the dollar relative to the yen will have what impact on the purchase of U.S. goods in Japan?

The market value of all final goods and services produced during a given time period is called ________.

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

If economic conditions are such that very slow growth is expected in the foreseeable future, one would want to invest in industries with ________ sensitivity to economic conditions.

Large-growth companies generally emerge in the ________ stage.

An analyst starts by examining the broad economic environment and then considers the implications of the economy on the industry in which the firm operates. Finally, the firm's position within the industry is examined. This is called ________ analysis.

Which one of the following is not a U.S. supply shock?

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

Which of the following companies is the best example of a turnaround?

The discount rate is the ________.

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

If interest rates increase, business investment expenditures are likely to ________ and consumer durable expenditures are likely to ________.

Which industry would you expect to find the highest dividend payout yields?

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, the firm will sell only half as many gadgets. If the economy is strong, the after-tax profit of firm B will be ________.

According to ________ economists, the growth of the U.S. economy in the 1980s can be attributed to lower marginal tax rates, which improved the incentives for people to work.

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 40%. What is the breakeven number of gadgets B must sell to make a zero after-tax profit?

Which of the following actions should the central bank take if monetary authorities want to reduce the supply of money to slow the rate of inflation?