Question 91

Which of the following is most likely an example of how a change in lifestyles affects industries?

A)    Increasing demand for restaurant meals as more families have two employed spouses.

B)   Increased demand in the construction, furniture, and other related industries as a large portion of the population reaches young adulthood.

C)   More widespread use of perpetual inventory systems in the retail industry.

D)   Greater demand for domestically produced goods resulting from an increase in tariffs on imports.

Question 92

Using the following information about a company, the price to book value (P/BV) ratio is closest to:

   Current Assets = $50

   Short-term Debt = $50

   Gross Fixed Assets = $250

   Long-term Debt = $75

   Accumulated Depreciation = $100

   Price per Share = $45

   Number of Shares of Stock Outstanding = 10

A)    7.0.

B)   6.0.

C)   5.0.

D)   4.0.

Question 93

In the earnings multiplier model for stock valuation, the:

A)    leading price-to-earnings ratio depends on the expected dividend payout ratio.

B)   dividend payout ratio is the main determinant of the price-to-earnings ratio.

C)   trailing price-to-earnings ratio is divided by the difference between the required rate of return on the stock and the constant growth rate of dividends.

D)   required rate of return on the stock must be less than the constant growth rate of dividends.

Question 94

Which of the following statements about security markets is least accurate?

A)    An underwriter provides origination, risk bearing, and distribution.

B)   Well functioning securities markets offer internal and external efficiency.

C)   Well functioning securities markets provide liquidity and timely and accurate information.

D)   New shares of firms already trading on the exchange are called shelf issues.

Question 95

Stocks in general are least likely to be an attractive investment in which stage of the business cycle?

A)    Recession.

B)   Recovery.

C)   Late expansion.

D)   Early expansion.

[此贴子已经被作者于2008-11-8 15:35:49编辑过]

Question 91

Which of the following is most likely an example of how a change in lifestyles affects industries?

A)    Increasing demand for restaurant meals as more families have two employed spouses.

B)   Increased demand in the construction, furniture, and other related industries as a large portion of the population reaches young adulthood.

C)   More widespread use of perpetual inventory systems in the retail industry.

D)   Greater demand for domestically produced goods resulting from an increase in tariffs on imports.

The correct answer was A) Increasing demand for restaurant meals as more families have two employed spouses.

The four types of structural changes that affect industries are lifestyles, demographics, technology, and politics and regulation. The trend toward families with two working spouses is an example of a lifestyle change. A large portion of the population reaching young adulthood is a demographic change. Increasing use of perpetual inventory systems is a change in technology. Changes in tariff rates are one way that politics and regulation can affect industries.

This question tested from Session 14, Reading 57, LOS a

Question 92

Using the following information about a company, the price to book value (P/BV) ratio is closest to:

   Current Assets = $50

   Short-term Debt = $50

   Gross Fixed Assets = $250

   Long-term Debt = $75

   Accumulated Depreciation = $100

   Price per Share = $45

   Number of Shares of Stock Outstanding = 10

A)    7.0.

B)   6.0.

C)   5.0.

D)   4.0.

The correct answer was B) 6.0.

Total assets = current assets + gross fixed assets – accumulated depreciation = $50 + $250 - $100 = $200
Book value = total assets – short-term debt – long-term debt = $200 - $50 - $75 = $75
BVPS = $75/10 shares = $7.50 per share
Price/Book = $45/$7.50 = 6.0

This question tested from Session 14, Reading 61, LOS b

Question 93

In the earnings multiplier model for stock valuation, the:

A)    leading price-to-earnings ratio depends on the expected dividend payout ratio.

B)   dividend payout ratio is the main determinant of the price-to-earnings ratio.

C)   trailing price-to-earnings ratio is divided by the difference between the required rate of return on the stock and the constant growth rate of dividends.

D)   required rate of return on the stock must be less than the constant growth rate of dividends.

The correct answer was A) leading price-to-earnings ratio depends on the expected dividend payout ratio.

The earnings multiplier model is stated as: , where P₀/E₁ is the leading P/E ratio and D₁/E₁ is the expected dividend payout ratio. The model cannot be used if the required rate of return k is less than the constant growth rate of dividends g. The size of k – g is the main determinant of the size of the leading P/E ratio.

This question tested from Session 14, Reading 60, LOS c

Question 94

Which of the following statements about security markets is least accurate?

A)    An underwriter provides origination, risk bearing, and distribution.

B)   Well functioning securities markets offer internal and external efficiency.

C)   Well functioning securities markets provide liquidity and timely and accurate information.

D)   New shares of firms already trading on the exchange are called shelf issues.

The correct answer was D) New shares of firms already trading on the exchange are called shelf issues.

Seasoned issues are issues of new shares of firms whose shares are already trading in the market place. Shelf registration refers to securities that are registered but will be issued over a period of time.

This question tested from Session 13, Reading 52, LOS a

Question 95

Stocks in general are least likely to be an attractive investment in which stage of the business cycle?

A)    Recession.

B)   Recovery.

C)   Late expansion.

D)   Early expansion.

The correct answer was C)

In the late expansion stage, a country’s stock, commodity, and property valuations are typically peaking. Interest-sensitive stocks, along with bonds, are attractive investments at this stage of the business cycle. Stocks in general are a more attractive investment toward the end of a recession, when a recovery begins, and in the early stages of an economic expansion.

This question tested from Session 14, Reading 58, LOS a

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