FIN 320 Week 7 Quiz – Strayer

FIN 320 Week 7 Quiz – Strayer

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Quiz 5 Chapter 12 and 13
Chapter 12: ___________________________________________________________________________
1. A top-down analysis of a firm's prospects starts with an analysis of the ____.


A. firm's position in its industry

B. U.S. economy or even the global economy

C. industry

D. specific firm under consideration


2. In 1980 the dollar-yen exchange rate was about $.0045. In 2012 the yen-dollar exchange rate was about 80 yen per dollar. A Japanese producer would have had to increase the dollar price of a good sold in the United States by approximately _____ to maintain the same yen price in 2012.


A. 178%

B. 79.5%

C. 265.4%

D. 36%


3. An increase in the value of the yen against the U.S. dollar can cause the Japanese automaker Toyota to either _____________ on its U.S. sales.


A. lose market share or reduce its profit margin

B. gain market share or reduce its profit margin

C. lose market share or increase its profit margin

D. gain market share or increase its profit margin


4. You estimate that the present value of a firm's cash flow is valued at $15 million. The break up value of the firm if you were to sell the major assets and divisions separately would be $20 million. This is an example of what Peter Lynch would call ___________.


A. a stalwart

B. slow growth

C. a star

D. an asset play


5. Between 1999 and 2010, the purchasing power of the U.S. dollar increased relative to the purchasing power of _______.


A. the United Kingdom

B. the Euro

C. Switzerland

D. Canada


6. If you believe the economy is about to go into a recession, you might change your asset allocation by selling _______ and buying ______.


A. growth stocks; long-term bonds

B. long-term bonds; growth stocks

C. defensive stocks; growth stocks

D. defensive stocks; long-term bonds


7. The yield curve spread between the 10-year T-bond yield and the federal funds rate is a _______ economic indicator.


A. leading

B. lagging

C. coincident

D. mixed


8. The Conference Board's Consumer Confidence Index is released ______.


A. daily

B. weekly

C. monthly

D. quarterly


9. You can earn abnormal returns on your investments via macro forecasting ______.


A. if you can forecast the economy at all

B. if you can forecast the economy as well as the average forecaster

C. if you can forecast the economy better than the average forecaster

D. only if you can forecast the economy with perfect accuracy


10. Which of the following industries would most analysts classify as mature?


A. Internet service providers

B. Biotechnology

C. Wireless communication

D. Auto manufacturing


11. Which one of the following stocks represents industries with below-average sensitivity to the state of the economy?


A. Financials

B. Technology

C. Food and beverage

D. Cyclicals


12. The most widely used monetary policy tool is _________.


A. altering the discount rate

B. altering reserve requirements

C. open market operations

D. increasing the budget deficit


13. Which one of the following is the ratio of actual output from factories to potential output from factories?


A. Capacity utilizationrate

B. Participation rate

C. Durable goods orders rate

D. Industrial production rate


14. According to __________ economists, the growth of the U.S. economy in the 1980s can be attributed to lower marginal tax rates, which improved the incentives for people to work.


A. Keynesian

B. monetarist

C. supply-side

D. demand-side


15. The market value of all goods and services produced during a given time period is called ______.


A. GDP

B. industrial production

C. capacity utilization

D. factory orders


16. A big increase in government spending is an example of a _________.


A. positive demand shock

B. positive supply shock

C. negative demand shock

D. negative supply shock


17. GDP refers to _________.


A. the amount of personal disposable income in the economy

B. the difference between government spending and government revenues

C. the total manufacturing output in the economy

D. the total production of goods and services in the economy


18. Portfolio manager Peter Lynch would classify Coca-Cola as _________.


A. an asset play

B. a slow grower

C. a stalwart

D. a turnaround


19. Attempting to forecast future earnings and dividends is consistent with which of the following approaches to securities analysis?


A. Technical analysis

B. Fundamental analysis

C. Both technical analysis and fundamental analysis

D. Indexing


20. The analysis of the determinants of firm value is called _____________.


A. fundamental analysis

B. technical analysis

C. momentum analysis

D. indexing


21. Which of the following companies is the best example of a turnaround?


A. Coca-Cola

B. Microsoft

C. ExxonMobil

D. Kmart


22. Inflation is caused by ________________.


A. unions

B. rapid growth of the money supply

C. excess supply

D. low rates of capacity utilization


23. Everything else equal, if you expect a larger interest rate increase than other market participants, you should _________.


A. buy long-term bonds

B. buy short-term bonds

C. buy common stocks

D. buy preferred stocks


24. To obtain an approximate estimate of the real interest rate, one must _________ the __________ the nominal risk-free rate.


A. add; default premium to

B. subtract; default premium from

C. add; expected inflation to

D. subtract; expected inflation from


25. Which of the following would not be considered a supply shock?


A. A change in the price of imported oil

B. Frost damage to the orange crop

C. A change in the level of education of the average worker

D. An increase in the level of government spending


26. If economic conditions are such that very slow growth is expected in the foreseeable future, one would want to invest in industries with __________ sensitivity to economic conditions.


A. below-average

B. average

C. above-average

D. Since growth is expected to be slow, sensitivity to economic conditions is not an issue.


27. Which of the following is not an example of fiscal policy?


A. Social Security spending

B. Medicare spending

C. Fed purchases of Treasury securities

D. Changes in the tax rate


28. Supply-side economics tends to focus on _______________.


A. government spending

B. price controls

C. monetary policy

D. increasing productive capacity


29. Which one of the following describes the amount by which government spending exceeds government revenues?


A. Balance of trade

B. Budget deficit

C. Gross domestic product

D. Output gap


30. Which one of the following is probably the most direct and immediate way to stimulate or slow the economy, although it is not very useful for fine-tuning economic performance?


A. Fiscal policy

B. Monetary policy

C. Supply-side policy

D. Rising minimum wages


31. In macroeconomic terms, an increase in the price of imported oil or a decrease in the availability of oil is an example of a _________.


A. demand shock

B. supply shock

C. monetary shock

D. refinery shock


32. ______________ in interest rates are associated with stock market declines.


A. Anticipated increases

B. Unanticipated increases

C. Anticipated decreases

D. Unanticipated decreases


33. The average duration of unemployment is _________.


A. a leading economic indicator

B. a coincidental economic indicator

C. a lagging economic indicator

D. both a coincidental indicator and a lagging indicator


34. The ratio of the purchasing power of two economies is termed the _______.


A. balance of trade

B. real exchange rate

C. real interest rate

D. nominal exchange rate


35. Everything else equal, an increase in the government budget deficit would:

I. Increase the government's demand for funds
II. Shift the demand curve for funds to the left
III. Increase the interest rate in the economy


A. II only

B. I and II only

C. I and III only

D. I, II, and III


36. Which of the following affects a firm's sensitivity of its earnings to the business cycle?

I. Financial leverage
II. Operating leverage
III. Type of product


A. II only

B. I and II only

C. I and III only

D. I, II, and III


37. Which of the following describes the rate at which your ability to purchase grows while you hold an interest-earning investment?


A. The nominal exchange rate

B. The nominal interest rate

C. The real exchange rate

D. The real interest rate


38. An example of a highly cyclical industry is the _________.


A. automobile industry

B. tobacco industry

C. pharmaceutical industry

D. utility industry


39. The stock price index and contracts and orders for nondefense capital goods are _________.


A. leading economic indicators

B. coincidental economic indicators

C. lagging economic indicators

D. leading and coincidental indicators, respectively


40. Which one of the following is not a demand shock?


A. Increase in government spending

B. Increases in the money supply

C. Reductions in consumer spending

D. Improvements in education of U.S. workers


41. Which one of the following is not a U.S. supply shock?


A. Unions force an increase in national wage rates.

B. The oil supply from the Middle East drops 30%.

C. Extended droughts reduce U.S. food production 25%.

D. Chinese purchases of U.S. exports increase.


42. Pharmaceuticals, food, and other necessities would be good performers during the ____ stage of the business cycle.


A. peak

B. contraction

C. trough

D. expansion


43. Capital goods industries such as industrial equipment, transportation, and co