Question 1

In the start-up stage of the industry life cycle,

Accepted Answer

A)  it is difficult to predict which firms will succeed and which firms will fail. 
B)  industry growth is very rapid. 
C)  firms pay a high level of dividends. 
D)  -it is difficult to predict which firms will succeed and which firms will fail, and industry growth is very rapid. 
E)  industry growth is very rapid, and firms pay a high level of dividends. 
A)  it is difficult to predict which firms will succeed and which firms will fail. 
B)  industry growth is very rapid. 
C)  firms pay a high level of dividends. 
D)  -it is difficult to predict which firms will succeed and which firms will fail, and industry growth is very rapid. 
E)  industry growth is very rapid, and firms pay a high level of dividends. D

Question 2

The industry with the lowest return in 2016 was

Accepted Answer

A)  -asset management. 
B)  telecom services. 
C)  health care. 
D)  business software. 
E)  money center banks. 
A)  -asset management. 
B)  telecom services. 
C)  health care. 
D)  business software. 
E)  money center banks. A

Question 3

According to Michael Porter, there are five determinants of competition. An example of _____ is when competitors seek to expand their share of the market.

Accepted Answer

A)  threat of entry 
B)  -rivalry between existing competitors 
C)  pressure from substitute products 
D)  bargaining power of buyers 
E)  bargaining power of suppliers 
A)  threat of entry 
B)  -rivalry between existing competitors 
C)  pressure from substitute products 
D)  bargaining power of buyers 
E)  bargaining power of suppliers B

Question 4

The industry with the highest ROE in 2015-2016 was

Accepted Answer

A)  -major airlines. 
B)  trucking. 
C)  business software. 
D)  computer systems. 
E)  integrated oil and gas. 
A)  -major airlines. 
B)  trucking. 
C)  business software. 
D)  computer systems. 
E)  integrated oil and gas.

Question 5

Two firms, A and B, both produce widgets. The price of widgets is $1 each. Firm A has total fixed costs of $500,000 and variable costs of 50¢ per widget. Firm B has total fixed costs of $240,000 and variable costs of 75¢ per widget. The corporate tax rate is 40%. If the economy is strong, each firm will sell 1,200,000 widgets. If the economy enters a recession, each firm will sell 1,100,000 widgets. Calculate firm A's degree of operating leverage.

Accepted Answer

A)  -11.0 
B)  2.86 
C)  9.09 
D)  1.00 
A)  -11.0 
B)  2.86 
C)  9.09 
D)  1.00

Question 6

Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers. If the economy is strong, the tax of firm C will be

Accepted Answer

A)  -$420,000. 
B)  $750,000. 
C)  $510,000. 
D)  $204,000. 
A)  -$420,000. 
B)  $750,000. 
C)  $510,000. 
D)  $204,000.

Question 7

According to Michael Porter, there are five determinants of competition. An example of _____ is when the availability limits the prices that can be charged to customers.

Accepted Answer

A)  threat of entry 
B)  rivalry between existing competitors 
C)  -pressure from substitute products 
D)  bargaining power of buyers 
E)  bargaining power of suppliers 
A)  threat of entry 
B)  rivalry between existing competitors 
C)  -pressure from substitute products 
D)  bargaining power of buyers 
E)  bargaining power of suppliers

Question 8

An example of a highly cyclical industry is

Accepted Answer

A)  -the automobile industry. 
B)  the tobacco industry. 
C)  the food industry. 
D)  the automobile industry and the tobacco industry. 
E)  the tobacco industry and the food industry. 
A)  -the automobile industry. 
B)  the tobacco industry. 
C)  the food industry. 
D)  the automobile industry and the tobacco industry. 
E)  the tobacco industry and the food industry.

Question 9

A peak is

Accepted Answer

A)  -a transition from an expansion in the business cycle to the start of a contraction. 
B)  a transition from a contraction in the business cycle to the start of an expansion. 
C)  a depression that lasts more than three years. 
D)  only a feature of geography and not an investment term. 
E)  None of the options are correct. 
A)  -a transition from an expansion in the business cycle to the start of a contraction. 
B)  a transition from a contraction in the business cycle to the start of an expansion. 
C)  a depression that lasts more than three years. 
D)  only a feature of geography and not an investment term. 
E)  None of the options are correct.

Question 10

Sector rotation

Accepted Answer

A)  should always be carried out. 
B)  is never worthwhile. 
C)  -is shifting the portfolio more heavily toward an industry or sector that is expected to perform well in the future. 
D)  can be implemented without cost. 
A)  should always be carried out. 
B)  is never worthwhile. 
C)  -is shifting the portfolio more heavily toward an industry or sector that is expected to perform well in the future. 
D)  can be implemented without cost.

Question 11

If interest rates decrease, business investment expenditures are likely to ______, and consumer durable expenditures are likely to _________.

Accepted Answer

A)  -increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
E)  be unaffected; be unaffected 
A)  -increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
E)  be unaffected; be unaffected

Question 12

Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers. If the economy is strong, the before-tax profit of firm C will be

Accepted Answer

A)  $1,680,000. 
B)  -$1,050,000. 
C)  $510,000. 
D)  $204,000. 
A)  $1,680,000. 
B)  -$1,050,000. 
C)  $510,000. 
D)  $204,000.

Question 13

The industry life cycle is described by which of the following stage(s)?

Accepted Answer

A)  Start-up 
B)  Consolidation 
C)  Absolute decline 
D)  -Start-up and consolidation 
E)  All of the options are correct. 
A)  Start-up 
B)  Consolidation 
C)  Absolute decline 
D)  -Start-up and consolidation 
E)  All of the options are correct.

Question 14

Two firms, A and B, both produce widgets. The price of widgets is $1 each. Firm A has total fixed costs of $500,000 and variable costs of 50¢ per widget. Firm B has total fixed costs of $240,000 and variable costs of 75¢ per widget. The corporate tax rate is 40%. If the economy is strong, each firm will sell 1,200,000 widgets. If the economy enters a recession, each firm will sell 1,100,000 widgets. If the economy is strong, the after-tax profit of Firm A will be

Accepted Answer

A)  $0. 
B)  $6,000. 
C)  $36,000. 
D)  -$60,000. 
A)  $0. 
B)  $6,000. 
C)  $36,000. 
D)  -$60,000.

Question 15

Demand-side economics is concerned with

Accepted Answer

A)  government spending and tax levels. 
B)  monetary policy. 
C)  fiscal policy. 
D)  government spending, tax levels, and monetary policy. 
E)  -All of the options are correct. 
A)  government spending and tax levels. 
B)  monetary policy. 
C)  fiscal policy. 
D)  government spending, tax levels, and monetary policy. 
E)  -All of the options are correct.

Question 16

The industry with the lowest ROE in 2015-2016 was

Accepted Answer

A)  money center banks. 
B)  chemical products. 
C)  business software. 
D)  biotech. 
E)  -integrated oil and gas. 
A)  money center banks. 
B)  chemical products. 
C)  business software. 
D)  biotech. 
E)  -integrated oil and gas.

Question 17

Two firms, A and B, both produce widgets. The price of widgets is $1 each. Firm A has total fixed costs of $500,000 and variable costs of 50¢ per widget. Firm B has total fixed costs of $240,000 and variable costs of 75¢ per widget. The corporate tax rate is 40%. If the economy is strong, each firm will sell 1,200,000 widgets. If the economy enters a recession, each firm will sell 1,100,000 widgets. If the economy is strong, the after-tax profit of Firm B will be

Accepted Answer

A)  $0. 
B)  $6,000. 
C)  -$36,000. 
D)  $60,000. 
A)  $0. 
B)  $6,000. 
C)  -$36,000. 
D)  $60,000.

Question 18

In the decline stage of the industry life cycle,

Accepted Answer

A)  the product may have reached obsolescence. 
B)  the industry will grow at a rate less than the overall economy. 
C)  the industry may experience negative growth. 
D)  the product may have reached obsolescence, and the industry will grow at a rate less than the overall economy. 
E)  -the product may have reached obsolescence, the industry will grow at a rate less than the overall economy, and the industry may experience negative growth. 
A)  the product may have reached obsolescence. 
B)  the industry will grow at a rate less than the overall economy. 
C)  the industry may experience negative growth. 
D)  the product may have reached obsolescence, and the industry will grow at a rate less than the overall economy. 
E)  -the product may have reached obsolescence, the industry will grow at a rate less than the overall economy, and the industry may experience negative growth.

Question 19

A variety of factors relating to industry structure affect the performance of the firm, including

Accepted Answer

A)  threat of entry. 
B)  rivalry between existing competitors. 
C)  the state of the economy. 
D)  threat of entry and the state of the economy. 
E)  -threat of entry and rivalry between existing competitors. 
A)  threat of entry. 
B)  rivalry between existing competitors. 
C)  the state of the economy. 
D)  threat of entry and the state of the economy. 
E)  -threat of entry and rivalry between existing competitors.

Question 20

Increases in the money supply will cause demand for investment and consumption goods to _______ in the short run and cause prices to ________ in the long run.

Accepted Answer

A)  -increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; hold steady 
E)  be unaffected; be unaffected 
A)  -increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; hold steady 
E)  be unaffected; be unaffected

Exam 17: Macroeconomic and Industry Analysis

In the start-up stage of the industry life cycle,

The industry with the lowest return in 2016 was

According to Michael Porter, there are five determinants of competition. An example of _____ is when competitors seek to expand their share of the market.

The industry with the highest ROE in 2015-2016 was

According to Michael Porter, there are five determinants of competition. An example of _____ is when the availability limits the prices that can be charged to customers.

An example of a highly cyclical industry is

A peak is

Sector rotation

If interest rates decrease, business investment expenditures are likely to ______, and consumer durable expenditures are likely to _________.

The industry life cycle is described by which of the following stage(s)?

Demand-side economics is concerned with

The industry with the lowest ROE in 2015-2016 was

In the decline stage of the industry life cycle,

A variety of factors relating to industry structure affect the performance of the firm, including

Increases in the money supply will cause demand for investment and consumption goods to _______ in the short run and cause prices to ________ in the long run.

The Investment Environment

Asset Classes and Financial Instruments

How Securities Are Traded

Mutual Funds and Other Investment Companies

Risk, Return, and the Historical Record

Capital Allocation to Risky Assets

Optimal Risky Portfolios

Index Models

The Capital Asset Pricing Model

Arbitrage Pricing Theory and Multifactor Models of Risk and Return

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Empirical Evidence on Security Returns

Bond Prices and Yields

The Term Structure of Interest Rates

Managing Bond Portfolios

Equity Valuation Models

Financial Statement Analysis

Options Markets: Introduction

Option Valuation

Futures Markets

Futures, Swaps, and Risk Management

Portfolio Performance Evaluation

International Diversification

Hedge Funds

The Theory of Active Portfolio Management

Investment Policy and the Framework of the Cfa Institute

Filters

If interest rates decrease, business investment expenditures are likely to , and consumer durable expenditures are likely to ___.

Increases in the money supply will cause demand for investment and consumption goods to _ in the short run and cause prices to __ in the long run.