Exhibit 12.6 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Consider the following information that you propose to use to obtain an estimate of year 2004 EPS for the MacLog Company. \[\begin{array} { l r r } & \text { Year } 2003& \begin{array} { r } \text { Estimated } \\ \text { Year 2004 } \end{array} \\ \hline \text { GDP } & 11,000 \text { Billion } \\ \text { GDP growth } && 3.5 \%\\ \text { Sales per share} &\$ 800 \\ \text { Operating profit margin}&12 \% \\\text { Depreciation/Fixed Assets } && 14 \% \\ \text { Fixed asset turnover } && 2 \\ \text { Interest rate } && 3.5 \% \\ \text { Total asset turnover } && 0.7 \\ \text { Debt/Total assets } && 45 \% \\ \text { Tax rate } && 36 \%\\ \end{array}\] In addition a regression analysis indicates the following relationship between growth in sales per share for MacLog and GDP growth is %$\Delta$ Sales per share = 0.015 + 0.75(%$\Delta$GDP) -Refer to Exhibit 12.6. Estimate the firm's sales per share for the year 2004.

A) $833.04 B) $900.08 C) $885.03 D) $925.56 E) $850.75 A) $833.04 B) $900.08 C) $885.03 D) $925.56 E) $850.75

Exhibit 12.6 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Consider the following information that you propose to use to obtain an estimate of year 2004 EPS for the MacLog Company. \[\begin{array} { l r r } & \text { Year } 2003& \begin{array} { r } \text { Estimated } \\ \text { Year 2004 } \end{array} \\ \hline \text { GDP } & 11,000 \text { Billion } \\ \text { GDP growth } && 3.5 \%\\ \text { Sales per share} &\$ 800 \\ \text { Operating profit margin}&12 \% \\\text { Depreciation/Fixed Assets } && 14 \% \\ \text { Fixed asset turnover } && 2 \\ \text { Interest rate } && 3.5 \% \\ \text { Total asset turnover } && 0.7 \\ \text { Debt/Total assets } && 45 \% \\ \text { Tax rate } && 36 \%\\ \end{array}\] In addition a regression analysis indicates the following relationship between growth in sales per share for MacLog and GDP growth is %$\Delta$ Sales per share = 0.015 + 0.75(%$\Delta$GDP) -Refer to Exhibit 12.6. Calculate the firm's level of Total Assets per share for the year 2004.

A) $1050.65 B) $1065.67 C) $1113.58 D) $1190.06 E) $1385.77 A) $1050.65 B) $1065.67 C) $1113.58 D) $1190.06 E) $1385.77

Exam 12: Macroanalysis and Microvaluation of the Stock Market

The dividend payout ratio for the aggregate market is 55 percent, the required rate of return is 15 percent, and the expected growth rate for dividends is 7 percent. Compute the current earnings multiple.

(Multiple Choice)

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Question 41

The dividend payout ratio for the aggregate market is 65 percent, the required rate of return is 13 percent, and the expected growth rate for dividends is 8 percent. Compute the current earnings multiple.

(Multiple Choice)

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(34)

Question 42

The University of Michigan Consumer Sentiment Index is an example of a leading indicator.

(True/False)

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(25)

Question 43

An analysis of U.S. equity markets using the cash flow techniques concludes that the market is not fully valued.

(True/False)

4.9/5

(29)

Question 44

Building permits for new private housing units are listed as a leading indicator by the National Bureau of Economic Research (NBER).

(True/False)

4.7/5

(31)

Question 45

Exhibit 12.8 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) As an economist for a research firm you are forecasting the market P/E ratio using the dividend discount model. Because the economy has been slow for 5 years, you expect the dividend-payout ratio to be 55%. Long-term government bond rates are at 6% and the equity risk premium is estimated to be 3%. Return on equity (ROE) is estimated to be 11%. -Refer to Exhibit 12.8. What is the expected growth rate?

(Multiple Choice)

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Question 46

The valuation techniques presented in the chapter can only be applied to the stock market in the United States, since the U.S. stock market is inefficient.

(True/False)

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Question 47

Exhibit 12.3 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Assume that the dividend payout ratio will be 55 percent when the rate on long-term government bonds falls to 9 percent. Since investors are becoming more risk averse, the equity risk premium will rise to 8 percent and investors will require a 7 percent return. The return on equity will be 13 percent. -Refer to Exhibit 12.3. To what price will the market rise if the earnings expectation is $1.5?

(Multiple Choice)

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Question 48

You are attempting to estimate expected earnings per share for a major stock market series. You have determined an appropriate estimate for sales per share. Which of the following methods can be used to estimate the profit margin?

(Multiple Choice)

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Question 49

Which of the following is not a factor under the Free Cash Flow to Equity (FCFE) Model?

(Multiple Choice)

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Question 50

Exhibit 12.6 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Consider the following information that you propose to use to obtain an estimate of year 2004 EPS for the MacLog Company. Year 2003 Estimated Year 2004 GDP 11,000 Billion GDP growth 3.5\% Sales per share \ 800 Operating profit margin 12\% Depreciation/Fixed Assets 14\% Fixed asset turnover 2 Interest rate 3.5\% Total asset turnover 0.7 Debt/Total assets 45\% Tax rate 36\% In addition a regression analysis indicates the following relationship between growth in sales per share for MacLog and GDP growth is % $\Delta$ Sales per share = 0.015 + 0.75(% $\Delta$ GDP) -Refer to Exhibit 12.6. Estimate the firm's sales per share for the year 2004.

(Multiple Choice)

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(31)

Question 51

There is a negative relationship between the capacity utilization rate and the profit margin.

(True/False)

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Question 52

Exhibit 12.6 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Consider the following information that you propose to use to obtain an estimate of year 2004 EPS for the MacLog Company. Year 2003 Estimated Year 2004 GDP 11,000 Billion GDP growth 3.5\% Sales per share \ 800 Operating profit margin 12\% Depreciation/Fixed Assets 14\% Fixed asset turnover 2 Interest rate 3.5\% Total asset turnover 0.7 Debt/Total assets 45\% Tax rate 36\% In addition a regression analysis indicates the following relationship between growth in sales per share for MacLog and GDP growth is % $\Delta$ Sales per share = 0.015 + 0.75(% $\Delta$ GDP) -Refer to Exhibit 12.6. Calculate the firm's level of Total Assets per share for the year 2004.

(Multiple Choice)

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Question 53

Stock prices move coincidentally with the economy.

(True/False)

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(27)

Question 54

The U.S. balance of payments, the federal deficit and military contract awards are ____ of aggregate economic activity.

(Multiple Choice)

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Question 55

A main limitation of the NBER indicator series is false signals.

(True/False)

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(40)

Question 56

It is more important to estimate future earnings than the future earnings multiplier.

(True/False)

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(40)

Question 57

Which of the following economic series is not included in the National Bureau of Economic Research (NBER) coincident economic indicator group?

(Multiple Choice)

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Question 58

If, for the S&P Industrials Index, the profit margin was 0.35 and the equity turnover ratio was 10, the ROE would be:

(Multiple Choice)

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Question 59

Which of the following economic series is not included in the National Bureau of Economic Research (NBER) leading indicator group?

(Multiple Choice)

4.8/5

(37)

Question 60

Showing 41 - 60 of 119

Exam 12: Macroanalysis and Microvaluation of the Stock Market

The dividend payout ratio for the aggregate market is 55 percent, the required rate of return is 15 percent, and the expected growth rate for dividends is 7 percent. Compute the current earnings multiple.

The dividend payout ratio for the aggregate market is 65 percent, the required rate of return is 13 percent, and the expected growth rate for dividends is 8 percent. Compute the current earnings multiple.

The University of Michigan Consumer Sentiment Index is an example of a leading indicator.

An analysis of U.S. equity markets using the cash flow techniques concludes that the market is not fully valued.

Building permits for new private housing units are listed as a leading indicator by the National Bureau of Economic Research (NBER).

The valuation techniques presented in the chapter can only be applied to the stock market in the United States, since the U.S. stock market is inefficient.

You are attempting to estimate expected earnings per share for a major stock market series. You have determined an appropriate estimate for sales per share. Which of the following methods can be used to estimate the profit margin?

Which of the following is not a factor under the Free Cash Flow to Equity (FCFE) Model?

There is a negative relationship between the capacity utilization rate and the profit margin.

Stock prices move coincidentally with the economy.

The U.S. balance of payments, the federal deficit and military contract awards are ____ of aggregate economic activity.

A main limitation of the NBER indicator series is false signals.

It is more important to estimate future earnings than the future earnings multiplier.

Which of the following economic series is not included in the National Bureau of Economic Research (NBER) coincident economic indicator group?

If, for the S&P Industrials Index, the profit margin was 0.35 and the equity turnover ratio was 10, the ROE would be:

Which of the following economic series is not included in the National Bureau of Economic Research (NBER) leading indicator group?

The Investment Setting

The Asset Allocation Decision

Selecting Investments in a Global Market

Organization and Functioning of Securities Markets

Security-Market Indexes

Efficient Capital Markets

An Introduction to Portfolio Management

An Introduction to Asset Pricing Models

Multifactor Models of Risk and Return

Analysis of Financial Statements

Introduction to Security Valuation

Industry Analysis

Company Analysis and Stock Valuation

Technical Analysis

Equity Portfolio Management Strategies

Bond Fundamentals

The Analysis and Valuation of Bonds

Bond Portfolio Management Strategies

An Introduction to Derivative Markets and Securities

Forward and Futures Contracts

Option Contracts

Swap Contracts, Convertible Securities, and Other Embedded Derivatives

Professional Money Management, Alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

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