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Study Resources (Business Management)

   The financial statements of Midwest Tours are given below.         51. Refer to the financial statements of Midwest Tours. The firm's current ratio for 2009 is ____. A. 1.82B. 1.03C. 1.30D. 1.65E. None of these is correct.   52. Refer to the financial statements of Midwest Tours. The firm's quick ratio for 2009 is _________. A. 1.71B. 0.78C. 0.85D. 1.56E. None of these is correct.   53. Refer to the financial.
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    51. Calculate Sharpe's measure of performance for Wildcat Fund. A. 1.00%B. 8.80%C. 44.00%D. 50.00%E. None of these is correct   52. Calculate Treynor's measure of performance for Wildcat Fund. A. 1.00%B. 8.80%C. 44.00%D. 50.00%E. None of these is correct   53. Calculate Jensen's measure of performance for Wildcat Fund. A. 1.00%B. 8.80%C. 44.00%D. 50.00%E. None of these is correct    The following data are available relating to the performance of Long Horn Stock Fund and the market.
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  Multiple Choice Questions  1. ______ are the dominant form of investing in securities markets for most individuals but ______ have enjoyed a far greater growth rate in the last decade. A. Hedge funds; hedge fundsB. Mutual funds; hedge fundsC. Hedge funds; mutual fundsD. Mutual funds; mutual fundsE. None of these is correct   2. Like mutual funds, hedge funds A. allow private investors.
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  Short Answer Questions  87. Publicly traded firms must prepare audited financial statements according to generally accepted accounting principles (GAAP). How do comparability problems arise?          88. In an increasingly globalized investment environment, comparability problems become even greater. Discuss some of the problems for the investor who wishes to have an internationally diversified portfolio.Answer: Firms in.
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  Short Answer Questions  79. Define and discuss the Sharpe, Treynor, and Jensen measures of portfolio performance evaluation, and the situations in which each measure is the most appropriate measure.          80. What is the problem with using the Sharpe measure for evaluation of an active portfolio management strategy?              .
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  Short Answer Questions  49. Discuss performance evaluation of international portfolio managers in terms of potential sources of abnormal returns.          50. Discuss some of the factors that might be included in a multifactor model of security returns in an international application of arbitrage pricing theory (APT).              .
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Multiple Choice Questions  1. Hedge fundsI) are appropriate as a sole investment vehicle for an investor.II) should only be added to an already well-diversified portfolio.III) pose performance evaluation issues due to non-linear factor exposures.IV) have down-market betas that are typically larger than up-market betas.V) have symmetrical betas. A. I onlyB. II and VC. I, III, and.
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    11. ______ are subject to the Securities act of 1933 and the Investment Company Act of 1940 to protect unsophisticated investors. A. Hedge fundsB. Mutual fundsC. ADRsD. Hedge funds and ADRsE. Mutual funds and ADRs   12. Hedge funds traditionally have ______ than 100 investors and ______ to the general public. A. more; advertiseB. more; do not advertiseC. less; advertiseD. less; do not advertiseE. None of.
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    41. The market's required rate of return on Sure's stock is ____. A. 14.0%B. 17.5%C. 16.5%D. 15.25%E. None of these is correct   42. What is the intrinsic value of Sure's stock today? A. $20.60B. $20.00C. $12.12D. $22.00E. None of these is correct   43. If Sure's intrinsic value is $21.00 today, what must be its growth rate? A. 0.0%B. 10%C. 4%D. 6%E. 7%    Torque Corporation is expected to pay a dividend of $1.00 in the.
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    11. The developed country with the highest average U.S. dollar equity-market excess return between 2000 and 2009 is A. JapanB. NorwayC. AustriaD. U. S.E. None of these is correct   12. The emerging market country with the highest average U.S. dollar equity-market excess return between 2000 and 2009 is A. ChinaB. ColumbiaC. PolandD. TurkeyE. None of these is correct   13. The __________ equity market had the lowest average.
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    71. The M-squared measure A. considers only the return when evaluating mutual funds.B. considers the risk-adjusted return when evaluating mutual funds.C. considers only the total risk when evaluating mutual funds.D. considers only the market risk when evaluating mutual funds.E. None of these is correct.   72. The dollar-weighted return on a portfolio is equivalent to A. the time-weighted return.B. the geometric average return.C. the.
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    61. The total excess return on the Aggie managed portfolio was __________. A. 1%B. 3%C. 4%D. 5%E. None of these is correct   62. The contribution of asset allocation across markets to the total excess return was A. 1%B. 3%C. 4%D. 5%E. None of these is correct   63. The contribution of selection within markets to total excess return was A. 1%B. 3%C. 4%D. 5%E. None of these is correct   64. In measuring the comparative performance of.
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    71. Refer to the financial statements of Snapit Company. The firm's return on sales ratio for 2009 is _______. A. 0.0133B. 0.1325C. 1.325D. 1.260E. None of these is correct.   72. Refer to the financial statements of Snapit Company. The firm's return on equity ratio for 2009 is _______. A. 0.1235B. 0.0296C. 0.2960D. 2.2960E. None of these is correct.   73. Refer to the financial statements of Snapit Company..
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    91. According to Peter Lynch, a rough rule of thumb for security analysis is that A. the growth rate should be equal to the plowback rate.B. the growth rate should be equal to the dividend payout rate.C. the growth rate should be low for emerging industries.D. the growth rate should be equal to the P/E ratio.E. None.
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Multiple Choice Questions  1. A firm has a higher quick (or acid test) ratio than the industry average, which implies A. the firm has a higher P/E ratio than other firms in the industry.B. the firm is more likely to avoid insolvency in the short run than other firms in the industry.C. the firm may be.
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    71. Consider the free cash flow approach to stock valuation. Utica Manufacturing Company is expected to have before-tax cash flow from operations of $500,000 in the coming year. The firm's corporate tax rate is 30%. It is expected that $200,000 of operating cash flow will be invested in new fixed assets..
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Multiple Choice Questions  1. ________ is equal to the total market value of the firm's common stock divided by (the replacement cost of the firm's assets less liabilities). A. Book value per shareB. Liquidation value per shareC. Market value per shareD. Tobin's QE. None of these is correct.   2. High P/E ratios tend to indicate that a company will ______,.
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    21. Refer to the financial statements of Black Barn Company. The firm's times interest earned ratio for 2009 is ____. A. 8.86B. 7.17C. 9.66D. 6.86E. None of these is correct.   22. Refer to the financial statements of Black Barn Company. The firm's average collection period for 2009 is ____. A. 59.31B. 55.05C. 61.31D. 49.05E. None of these is correct.   23. Refer to the financial statements of Black.
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    111. Highpoint had a FCFE of $246M last year and has 123M shares outstanding. Highpoint's required return on equity is 10% and WACC is 9%. If FCFE is expected to grow at 8.0% forever, the intrinsic value of Highpoint's shares are ___________. A. $21.60B. $108C. $244.42D. $216.00E. None of these is correct   112. SGA Consulting had a FCFE of.
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  Short Answer Questions  127. Discuss the Gordon, or constant discounted dividend, model of common stock valuation. Include in your discussion the advantages, disadvantages, and assumptions of the model.          128. The price/earnings ratio, or multiplier approach, may be used for stock valuation. Explain this process and describe how the "multiplier" varies from the one available.
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    21. The __________ equity market had the highest average local currency standard deviation of excess returns between 2000 and 2009. A. TurkishB. FinnishC. IndonesianD. U. S.E. None of these is correct   22. The __________ equity market had the lowest average local currency standard deviation of excess returns between 2000 and 2009. A. TurkishB. FinnishC. IndonesianD. AustraliaE. None of these is correct   23. In 2009, the U. S..
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    21. Medtronic Company has an expected ROE of 16%. The dividend growth rate will be ________ if the firm follows a policy of paying 70% of earnings in the form of dividends. A. 3.0%B. 6.0%C. 7.2%D. 4.8%E. None of these is correct   22. High Speed Company has an expected ROE of 15%. The dividend growth rate will be ________.
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    41. Using the S&P500 portfolio as a proxy of the market portfolio A. is appropriate because U.S. securities represent more than 60% of world equities.B. is appropriate because most U.S. investors are primarily interested in U.S. securities.C. is appropriate because most U.S. and non-U.S. investors are primarily interested in U.S. securities.D. is inappropriate because U.S. securities.
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    61. Low Tech Chip Company is expected to have EPS of $2.50 in the coming year. The expected ROE is 14%. An appropriate required return on the stock is 11%. If the firm has a dividend payout ratio of 40%, the intrinsic value of the stock should be A. $22.73B. $27.50C. $28.57D. $38.46E. None of these is.
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    11. A study by Speidell and Bavishi (1992) found that when accounting statements of foreign firms were restated on a common accounting basis, A. the original and restated P/E ratios were quite similar.B. the original and restated P/E ratios varied considerably.C. most variation was explained by tax differences.D. most firms were consistent in their treatment of.
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    101. GAAP allows A. no leeway to manage earnings.B. minimal leeway to manage earnings.C. considerable leeway to manage earnings.D. earnings management if it is beneficial in increasing stock price.E. None of these is correct.   102. The most appropriate discount rate to use when applying a FCFE valuation model is the __________. A. required rate of return on equityB. WACCC. risk-free rateD. required rate of.
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    31. If you invested 50% of your money in the Canadian stock market and 50% in the U. S. stock market, the standard deviation of return of your portfolio would be __________. A. 12.53%B. 15.21%C. 17.50%D. 18.75%E. None of these is correct   32. The major concern that has been raised with respect to the weighting of countries within the.
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    11. The Gordon model A. is a generalization of the perpetuity formula to cover the case of a growing perpetuity.B. is valid only when g is less than k.C. is valid only when k is less than g.D. is a generalization of the perpetuity formula to cover the case of a growing perpetuity and is valid.
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    21. Suppose the risk-free return is 4%. The beta of a managed portfolio is 1.2, the alpha is 1%, and the average return is 14%. Based on Jensen's measure of portfolio performance, you would calculate the return on the market portfolio as A. 11.5%B. 14%C. 15%D. 16%E. None of these is correct   22. Suppose the risk-free return is 3%..
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    31. A preferred stock will pay a dividend of $7.50 in the upcoming year, and every year thereafter, i.e., dividends are not expected to grow. You require a return of 10% on this stock. Use the constant growth DDM to calculate the intrinsic value of this preferred stock. A. $0.75B. $7.50C. $64.12D. $56.25E. None of these is.
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  129. Discuss the relationships between the required rate of return on a stock, the firm's return on equity, the plowback rate, the growth rate, and the value of the firm.          130. Describe the free cash flow approach to firm valuation. How does it compare to the dividend discount model (DDM)?              .
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    51. Suppose that the average P/E multiple in the oil industry is 20. Dominion Oil is expected to have an EPS of $3.00 in the coming year. The intrinsic value of Dominion Oil stock should be ____. A. $28.12B. $35.55C. $60.00D. $72.00E. None of these is correct   52. Suppose that the average P/E multiple in the oil industry is.
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  81. Discuss, in general, the performance attribution procedures.          82. You invested $1,000 through your broker three years ago. Your account balance at the beginning of each period is shown in the table below.  - Calculate the annual return for each year. Show your calculations in the table.- Your broker called to tell you the.
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  89. Many different debt, or financial leverage, ratios are reported. Explain the relationship between total assets/equity and debt/equity.          90. Discuss the differences between economic earnings and accounting earnings. Which is preferred in financial analysis? Which is most widely used, and why?          91. The DuPont system decomposes ROE into the following components:  Enter the formula that corresponds.
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    31. You want to evaluate three mutual funds using the Jensen measure for performance evaluation. The risk-free return during the sample period is 6%, and the average return on the market portfolio is 18%. The average returns, standard deviations, and betas for the three funds are given below.  The fund with the.
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    41. Calculate the information ratio for Sooner Stock Fund. A. 1.53B. 1.30C. 8.67D. 31.43E. 37.14    The following data are available relating to the performance of Monarch Stock Fund and the market portfolio:  The risk-free return during the sample period was 4%.   42. What is the information ratio measure of performance evaluation for Monarch Stock Fund? A. 1.00%B. 280.00%C. 44.00%D. 50.00%E. None of these is correct   43. Calculate Sharpe's measure.
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    61. Refer to the financial statements of Midwest Tours. The firm's P/E ratio for 2009 is _________. A. 4.74B. 6.63C. 5.21D. 5.00E. None of these is correct.   62. Refer to the financial statements of Midwest Tours. The firm's market to book value for 2009 is _________. A. 0.24B. 0.95C. 0.71D. 1.12E. None of these is correct.    The financial statements of Snapit Company are given below.     63. Refer to.
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Multiple Choice Questions  1. Shares of several foreign firms are traded in the U. S. markets in the form of A. ADRsB. ECUsC. single-country fundsD. All of these are correctE. None of these is correct   2. __________ refers to the possibility of expropriation of assets, changes in tax policy, and the possibility of restrictions on foreign exchange transactions. A. Default riskB. Foreign exchange.
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    21. A hedge fund pursuing a ______ strategy is trying to exploit relative mispricing within a market, but is hedged to avoid taking a stance on the direction of the broad market. A. directionalB. nondirectionalC. market neutralD. arbitrage or speculationE. nondirectional and market neutral   22. An example of a ______ strategy is the mispricing of a futures contract that.
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  51. Marla holds her portfolio 100% in U.S. securities. She tells you that she believes foreign investing can be extremely hazardous to her portfolio. She's not sure about the details, but has "heard some things". Discuss this idea with Marla by listing three objections you have heard from your clients who.
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  88. Discuss the industry life cycle, how this concept can be used by security analysts, and the limitations of this concept for security analysis.          89. Discuss the ways in which the global economy might have an effect on a firm whose headquarters are in Montana. Be specific - cite some of the relevant.
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    81. Which of the following are issues when dealing with the financial statements of international firms? I) Many countries allow firms to set aside larger contingency reserves than the amounts allowed for U.S. firms.II) Many firms outside the U.S. use accelerated depreciation methods for reporting purposes, whereas most U.S. firms use.
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    41. The typical hedge fund fee structure is A. a management fee of 1% to 2%B. an annual incentive fee equal to 20% of investment profits beyond a stipulated benchmark performanceC. a 12-b1 fee of 1%D. a management fee of 1% to 2% and an annual incentive fee equal to 20% of investment profits beyond a.
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    11. Suppose two portfolios have the same average return, the same standard deviation of returns, but portfolio A has a lower beta than portfolio B. According to the Treynor measure, the performance of portfolio A __________. A. is better than the performance of portfolio BB. is the same as the performance of portfolio BC. is.
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    41. Assuming continued inflation, a firm that uses LIFO will tend to have a(n) _______ current ratio than a firm using FIFO, and the difference will tend to __________ as time passes. A. higher, increaseB. higher, decreaseC. lower, decreaseD. lower, increaseE. identical, remain the same   42. Fundamental analysis uses _________. A. earnings and dividends prospectsB. relative strengthC. price momentumD. earnings and dividends prospects, and.
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