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. $\begin{array}{lrr} \begin{array}{l} \\ \\ \text{GDP}\\ \text{GDP growth}\\ \text{Sales per share}\\ \text{Operating profit margin}\\ \text{Depreciation/Fixed Assets}\\ \text{Fixed asset turnover}\\ \text{Interest rate}\\ \text{Total asset turnover}\\ \text{Debt/Total assets}\\ \text{Tax rate}\\ \end{array}\ \begin{array}{r} \\ \text{Year 2003}\\ \hline \text{11,000 Billion}\\\\ \$ 800 \\\\\\\\\\\\\\\ \end{array}\ \begin{array}{r} Estimated\\ \text{Year 2004}\\ \hline\\ 3.5 \% \\\\ 12 \% \\ 14 \% \\ 2\\ 3.5 \% \\ 0.7 \\ 45 \% \\ 36\% \end{array}\ \end{array}$ In addition a regression analysis indicates the following relationship between growth in sales per share for MacLog and GDP growth is %D Sales per share = 0.015 + 0.75(%∆GDP) -Refer to Exhibit 12.6.Calculate the firm's EPS for the year 2004.

A) $15.25 B) $14.66 C) $17.25 D) $12.56 E) $18.57 A) $15.25 B) $14.66 C) $17.25 D) $12.56 E) $18.57

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. $\begin{array}{lrr} \begin{array}{l} \\ \\ \text{GDP}\\ \text{GDP growth}\\ \text{Sales per share}\\ \text{Operating profit margin}\\ \text{Depreciation/Fixed Assets}\\ \text{Fixed asset turnover}\\ \text{Interest rate}\\ \text{Total asset turnover}\\ \text{Debt/Total assets}\\ \text{Tax rate}\\ \end{array}\ \begin{array}{r} \\ \text{Year 2003}\\ \hline \text{11,000 Billion}\\\\ \$ 800 \\\\\\\\\\\\\\\ \end{array}\ \begin{array}{r} Estimated\\ \text{Year 2004}\\ \hline\\ 3.5 \% \\\\ 12 \% \\ 14 \% \\ 2\\ 3.5 \% \\ 0.7 \\ 45 \% \\ 36\% \end{array}\ \end{array}$ In addition a regression analysis indicates the following relationship between growth in sales per share for MacLog and GDP growth is %D Sales per share = 0.015 + 0.75(%∆GDP) -Refer to Exhibit 12.6.Calculate the per share interest rate charge for the year 2004.

A) $18.74 B) $14.72 C) $30.07 D) $13.76 E) $28.59 A) $18.74 B) $14.72 C) $30.07 D) $13.76 E) $28.59

Exam 12: Macroanalysis and Microvaluation of the Stock Market

One of the economic series included in the National Bureau of Economic Research (NBER)coincident indicator is the index of industrial production.

(True/False)

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Question 81

Exhibit 12.7 Use the Information Below for the Following Problem(S) You are using the free cash flow to equity (FCFE) technique to analyze U.S. equity market. The beginning FCFE is $90 and the required rate of return is 10%. Free cash flows are expected to grow at a 10% rate for the next two years and then grow at a constant rate of 7% forever. -Refer to Exhibit 12.7.What is the estimated value of the U.S.market today using the FCFE approach?

(Multiple Choice)

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Question 82

It is important to analyze the economies and security markets before analyzing alternative industries or companies.

(True/False)

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Question 83

Excess liquidity is defined as

(Multiple Choice)

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Question 84

Dividend growth is positively related to the return on equity.

(True/False)

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Question 85

Exhibit 12.9 Use the Information Below for the Following Problem(S) The aggregate market currently has a retention ratio of 60 percent, a required rate of return of 12 percent, and an expected growth rate for dividends of 4 percent. -Refer to Exhibit 12.9.If the payout ratio changes to 50 percent,but there are no other changes,what will be the new P/E?

(Multiple Choice)

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Question 86

Exhibit 12.4 Use the Information Below for the Following Problem(S) Assume that the dividend payout ratio will be 45 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 7 percent and investors will require a 16 percent return. The return on equity will be 14 percent. -Refer to Exhibit 12.4.To what price will the market rise if the earnings expectation is $10.00?

(Multiple Choice)

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Question 87

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. GDP GDP growth Sales per share Operating profit margin Depreciation/Fixed Assets Fixed asset turnover Interest rate Total asset turnover Debt/Total assets Tax rate \ Year 2003 11,000 Billion \ 800 \ \ Estimated Year 2004 3.5\% 12\% 14\% 2 3.5\% 0.7 45\% 36\% \ In addition a regression analysis indicates the following relationship between growth in sales per share for MacLog and GDP growth is %D Sales per share = 0.015 + 0.75(%∆GDP) -Refer to Exhibit 12.6.Calculate the firm's EPS for the year 2004.

(Multiple Choice)

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Question 88

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

(True/False)

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Question 89

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. GDP GDP growth Sales per share Operating profit margin Depreciation/Fixed Assets Fixed asset turnover Interest rate Total asset turnover Debt/Total assets Tax rate \ Year 2003 11,000 Billion \ 800 \ \ Estimated Year 2004 3.5\% 12\% 14\% 2 3.5\% 0.7 45\% 36\% \ In addition a regression analysis indicates the following relationship between growth in sales per share for MacLog and GDP growth is %D Sales per share = 0.015 + 0.75(%∆GDP) -Refer to Exhibit 12.6.Calculate the per share interest rate charge for the year 2004.

(Multiple Choice)

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Question 90

The National Bureau of Economic Research (NBER)has derived the following indicator series in order to monitor business cycles.

(Multiple Choice)

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Question 91

If interest rates rise due to inflation,and expected cash flows to a firm rise,then you would expect stock prices to

(Multiple Choice)

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Question 92

The multiplier approach for estimating the intrinsic market value of a major stock market series requires the following step(s):

(Multiple Choice)

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Question 93

Which of the following is not a determinant of the aggregate gross profit margin?

(Multiple Choice)

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Question 94

The dividend payout ratio for the aggregate market is 65 percent,the required rate of return is 12 percent,and the expected growth rate for dividends is 6 percent.Compute the current earnings multiple.

(Multiple Choice)

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Question 95

Exhibit 12.1 Use the Information Below for the Following Problem(S) Assume that the dividend payout ratio will be 65 percent when the rate on long-term government bonds falls to 8 percent. Since investors are becoming more risk averse, the equity risk premium will rise to 7 percent and investors will require a 15 percent return. The return on equity will be 12 percent. -Refer to Exhibit 12.1.What is your expectation of the market P/E ratio?

(Multiple Choice)

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Question 96

Which of the following economic series are included in the NBER leading indicator group?

(Multiple Choice)

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Question 97

Exhibit 12.1 Use the Information Below for the Following Problem(S) Assume that the dividend payout ratio will be 65 percent when the rate on long-term government bonds falls to 8 percent. Since investors are becoming more risk averse, the equity risk premium will rise to 7 percent and investors will require a 15 percent return. The return on equity will be 12 percent. -Refer to Exhibit 12.1.To what price will the market rise if the earnings expectation is $22.00 per share?

(Multiple Choice)

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Question 98

Which of the following is not normally associated with cyclical indicators?

(Multiple Choice)

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Question 99

Which of the following is not a major variable that affects the aggregate stock market earning multiplier in a country?

(Multiple Choice)

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Question 100

Showing 81 - 100 of 120

Exam 12: Macroanalysis and Microvaluation of the Stock Market

One of the economic series included in the National Bureau of Economic Research (NBER)coincident indicator is the index of industrial production.

It is important to analyze the economies and security markets before analyzing alternative industries or companies.

Excess liquidity is defined as

Dividend growth is positively related to the return on equity.

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

The National Bureau of Economic Research (NBER)has derived the following indicator series in order to monitor business cycles.

If interest rates rise due to inflation,and expected cash flows to a firm rise,then you would expect stock prices to

The multiplier approach for estimating the intrinsic market value of a major stock market series requires the following step(s):

Which of the following is not a determinant of the aggregate gross profit margin?

The dividend payout ratio for the aggregate market is 65 percent,the required rate of return is 12 percent,and the expected growth rate for dividends is 6 percent.Compute the current earnings multiple.

Which of the following economic series are included in the NBER leading indicator group?

Which of the following is not normally associated with cyclical indicators?

Which of the following is not a major variable that affects the aggregate stock market earning multiplier in a country?

An Overview of the Investment Process

The Asset Allocation Decision

The Global Market Investment Decision

Securities Markets: Organization and Operation

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

Security Valuation Principles

Industry Analysis

Company Analysis and Stock Valuation

Equity Portfolio Management Stragtegies

Technical Analysis

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

Investment Return and Risk Analysis Questions

Investment and Retirement Plans

Calculating Covariance and Correlation Coefficient of Assets

Portfolio Variance and Stock Weight Calculations

Portfolio Optimization with Negative Correlation: Finding Minimum Variance and Weight Allocation

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