Question 1

Price-to-book-value indicates how aggressively a stock is being priced.

Accepted Answer

A) True 
 B)False

Question 2

Rising corporate profits and are likely to have the greatest effect on which of the following industrial sectors?

Accepted Answer

A)  business equipment. 
B)  defense 
C)  food and agriculture 
D)  consumer durables 
A)  business equipment. 
B)  defense 
C)  food and agriculture 
D)  consumer durables

Question 3

Amgen's debt to equity ratio is .54 while Wal-Mart's is .68.By comparing these ratios we can conclude

Accepted Answer

A)  that Wal-Mart is in danger of bankruptcy. 
B)  that Amgen uses too little debt financing. 
C)  that Wal-Mart uses too little equity financing. 
D)  very little because the firm's are in different industries. 
A)  that Wal-Mart is in danger of bankruptcy. 
B)  that Amgen uses too little debt financing. 
C)  that Wal-Mart uses too little equity financing. 
D)  very little because the firm's are in different industries.

Question 4

Fundamental analysis involves the in-depth study of the

Accepted Answer

A)  role of nondiversifiable risk in an investor's portfolio. 
B)  financial condition and operating results of a given firm. 
C)  pattern of security prices as revealed in chart formations. 
D)  role of diversifiable risk in an investor's portfolio. 
A)  role of nondiversifiable risk in an investor's portfolio. 
B)  financial condition and operating results of a given firm. 
C)  pattern of security prices as revealed in chart formations. 
D)  role of diversifiable risk in an investor's portfolio.

Question 5

A comparison of a firm's current financial ratios to those of prior years allows one to

Accepted Answer

A)  accurately predict the future performance of a firm. 
B)  see how a firm's performance compares to that of a competitor. 
C)  see trends that are developing. 
D)  determine if the firm is performing better than the overall industry. 
A)  accurately predict the future performance of a firm. 
B)  see how a firm's performance compares to that of a competitor. 
C)  see trends that are developing. 
D)  determine if the firm is performing better than the overall industry.

Question 6

Company X and Company Y are in the same industry and have the following ratios.
   
Discuss the relative natures of the two companies in terms of risk and return.Identify the more growth-oriented firm and justify your selection.Support your discussion and conclusions by referring to the ratios.

Accepted Answer

Company Y has more financial risk becaus

Question 7

If a firm has an ROA of 10% and an ROE of 10%, then the

Accepted Answer

A)  operating results of the firm are improving. 
B)  firm has no financial leverage. 
C)  firm must have enough cash on hand to pay some extra dividends. 
D)  firm is losing money. 
A)  operating results of the firm are improving. 
B)  firm has no financial leverage. 
C)  firm must have enough cash on hand to pay some extra dividends. 
D)  firm is losing money.

Question 8

Return on equity (ROE)is computed by dividing net income by the market value of equity.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following factors are considered when analyzing an industry?
I.the nature and conditions of governmental regulations
II.the involvement and relations, if any, with labor unions
III.the development of new technologies relevant to the industry
IV.the extent of competition within the industry

Accepted Answer

A)  I, II and IV only 
B)  II, III and IV only 
C)  I, II and III only 
D)  I, II, III and IV 
A)  I, II and IV only 
B)  II, III and IV only 
C)  I, II and III only 
D)  I, II, III and IV

Question 10

The income statement and balance sheet are linked through the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 11

On December 31, the Gold Standard Company reported the following information on its financial statements.
 
According to this information, the company's current ratio is approximately

Accepted Answer

A)  1.39. 
B)  1.68. 
C)  1.73. 
D)  1.90. 
A)  1.39. 
B)  1.68. 
C)  1.73. 
D)  1.90.

Question 12

According to the efficient markets hypothesis, securities can be substantially mispriced in the marketplace.

Accepted Answer

A) True 
 B)False

Question 13

A lending institution would prefer that a firm have a ________ debt-equity ratio and a ________ times interest earned ratio.

Accepted Answer

A)  higher; higher 
B)  higher; lower 
C)  lower; higher 
D)  lower; lower 
A)  higher; higher 
B)  higher; lower 
C)  lower; higher 
D)  lower; lower

Question 14

The consumer electronics would be most significantly affected by

Accepted Answer

A)  developments in technology. 
B)  interest rates and inflation. 
C)  labor relations. 
D)  government regulations. 
A)  developments in technology. 
B)  interest rates and inflation. 
C)  labor relations. 
D)  government regulations.

Question 15

For a company to remain in business for the long term, cash flow from operations must generally be a positive number.

Accepted Answer

A) True 
 B)False

Question 16

Economic factors such as a weak dollar will have a negative impact on all industrial sectors.

Accepted Answer

A) True 
 B)False

Question 17

Industries in the rapid expansion stage will be especially sensitive to a slowing economy.

Accepted Answer

A) True 
 B)False

Question 18

The income statement indicates how successfully a company has utilized its assets.

Accepted Answer

A) True 
 B)False

Question 19

Which measure of the business cycle represents the market value of all goods and services produced in a country over a twelve-month period?

Accepted Answer

A)  industrial production index 
B)  money supply 
C)  gross domestic product 
D)  productivity average 
A)  industrial production index 
B)  money supply 
C)  gross domestic product 
D)  productivity average

Question 20

Which one of the following statements concerning accounting reports is correct?

Accepted Answer

A)  The income statement reflects the position of a firm as of a single point in time. 
B)  The total equity of a firm is equal to the total assets plus the total liabilities. 
C)  The statement of cash flows identifies both the sources and the uses of cash. 
D)  The income statement reflects the amount of cash available for investment and financing activities. 
A)  The income statement reflects the position of a firm as of a single point in time. 
B)  The total equity of a firm is equal to the total assets plus the total liabilities. 
C)  The statement of cash flows identifies both the sources and the uses of cash. 
D)  The income statement reflects the amount of cash available for investment and financing activities.

Price-to-book-value indicates how aggressively a stock is being priced.

Rising corporate profits and are likely to have the greatest effect on which of the following industrial sectors?

Amgen's debt to equity ratio is .54 while Wal-Mart's is .68.By comparing these ratios we can conclude

Fundamental analysis involves the in-depth study of the

A comparison of a firm's current financial ratios to those of prior years allows one to

Company X and Company Y are in the same industry and have the following ratios. Discuss the relative natures of the two companies in terms of risk and return.Identify the more growth-oriented firm and justify your selection.Support your discussion and conclusions by referring to the ratios.

If a firm has an ROA of 10% and an ROE of 10%, then the

Return on equity (ROE)is computed by dividing net income by the market value of equity.

The income statement and balance sheet are linked through the statement of cash flows.

On December 31, the Gold Standard Company reported the following information on its financial statements. According to this information, the company's current ratio is approximately

According to the efficient markets hypothesis, securities can be substantially mispriced in the marketplace.

A lending institution would prefer that a firm have a debt-equity ratio and a times interest earned ratio.

The consumer electronics would be most significantly affected by

For a company to remain in business for the long term, cash flow from operations must generally be a positive number.

Economic factors such as a weak dollar will have a negative impact on all industrial sectors.

Industries in the rapid expansion stage will be especially sensitive to a slowing economy.

The income statement indicates how successfully a company has utilized its assets.

Which measure of the business cycle represents the market value of all goods and services produced in a country over a twelve-month period?

Which one of the following statements concerning accounting reports is correct?

The Investment Environment

Securities Markets and Transactions

Investment Information and Securities Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Stock Valuation

Market Efficiency, Behavioral Finance, and Technical Analysis

Fixed-Income Securities

Bond Valuation

Mutual Funds: Professionally Managed Portfolios

Managing Your Own Portfolios

Options: Puts and Calls

Commodities and Financial Futures

Filters

Exam 7: Analyzing Common Stocks

Price-to-book-value indicates how aggressively a stock is being priced.

Rising corporate profits and are likely to have the greatest effect on which of the following industrial sectors?

Amgen's debt to equity ratio is .54 while Wal-Mart's is .68.By comparing these ratios we can conclude

Fundamental analysis involves the in-depth study of the

A comparison of a firm's current financial ratios to those of prior years allows one to

Company X and Company Y are in the same industry and have the following ratios. Discuss the relative natures of the two companies in terms of risk and return.Identify the more growth-oriented firm and justify your selection.Support your discussion and conclusions by referring to the ratios.

If a firm has an ROA of 10% and an ROE of 10%, then the

Return on equity (ROE)is computed by dividing net income by the market value of equity.

The income statement and balance sheet are linked through the statement of cash flows.

On December 31, the Gold Standard Company reported the following information on its financial statements. According to this information, the company's current ratio is approximately

According to the efficient markets hypothesis, securities can be substantially mispriced in the marketplace.

A lending institution would prefer that a firm have a ________ debt-equity ratio and a ________ times interest earned ratio.

The consumer electronics would be most significantly affected by

For a company to remain in business for the long term, cash flow from operations must generally be a positive number.

Economic factors such as a weak dollar will have a negative impact on all industrial sectors.

Industries in the rapid expansion stage will be especially sensitive to a slowing economy.

The income statement indicates how successfully a company has utilized its assets.

Which measure of the business cycle represents the market value of all goods and services produced in a country over a twelve-month period?

Which one of the following statements concerning accounting reports is correct?

The Investment Environment

Securities Markets and Transactions

Investment Information and Securities Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Stock Valuation

Market Efficiency, Behavioral Finance, and Technical Analysis

Fixed-Income Securities

Bond Valuation

Mutual Funds: Professionally Managed Portfolios

Managing Your Own Portfolios

Options: Puts and Calls

Commodities and Financial Futures

Filters

A lending institution would prefer that a firm have a debt-equity ratio and a times interest earned ratio.