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Question
one anomaly to the efficient market hypothesis is that investments in debt of large firms will earn higher returns than investments in their stock.
Answer
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bond averages that are expressed in percentages are not comparable to the s&p 500.
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comparisons of stock performance should use percentage changes instead of absolute price changes.
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realized returns include both dividends and price changes.
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if a stock increased from $25 to $50 in five years, the annual rate of return was 20 percent.
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the price to sales ratio may be a preferred analytical tool if a. the firm is not generating cash b. the firm is not generating earnings c. the p/e ratio is too high d. the dividend-growth model suggests the stock is undervalued
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the use of price to book ratios to select stocks suggests that a. high price to book stocks should be purchased b. low price to book stocks are overvalued c. a stock should be purchased if it is selling near its historic high price to book ratio d. a stock should be purchased if it is selling near its historic low price to book ratio
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according to the efficient market hypothesis, purchasing low p/s stocks should produce superior investment results.
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a higher beta decreases the required rate of return.
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the dividend-growth valuation model depends on dividends and the required rate of return.
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if the industry average days sales outstanding is 65 days and a firm with sales of $1,034,550 has receivables of $268,700, how much in interest expense could the firm save if the receivables turn over as quickly as the industry average and the cost of carrying the receivables is 9%?
Q:
an analysis of last year's financial statements produced the following results. current ratio 3.6 quick ratio 2.2 days sales outstanding 78.0 days inventory turnover 4.4 fixed asset turnover 6.4 operating profit margin 11.9% net profit margin 6.1% return on assets 8.8% return on equity 13.7% debt ratio 35.5% times-interest-earned 9.3x payout ratio 41.4% use the following data to compute the comparable financial ratios for next fiscal year. has the firm's financial position changed? current assets cash and shortterm investments $ 14,657,000 accounts receivable 71,873,000 inventory 56,372,0001 plant and equipment 26,881,000 long-term investments and other assets 20,606,000 total assets $190,389,000 current liabilities $ 37,481,000 long-term debt 17,895,000 equity 135,013,000 total liabilities and equity $190,389,000 sales $254,553,000 cost of goods sold 149,903,000 selling, administrative, and other expenses 69,609,000 earnings before interest and taxes 35,041,000 interest 2,529,000 taxes 13,972,540 net income $ 18,540,000 earnings per share $4.13 dividends per share $1.80 1 average inventory = $56,530,000
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your brother, who is prone to bearing substantial risk, suggests that you buy a security for $10,000 that promises to pay you $100,000 at the end of 15 years. what is the implied annual return or yield on this investment?
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you are hurt in a car accident and your lawyer wins a $100,000 settlement to be distributed as follows: $20,000 immediate payment $5,000 a year for ten years $30,000 after ten years. if the lawyer's fee is $10,000, what is the value of this settlement if the interest rate is 6 percent?
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air national's capacity is 120 passengers per flight. it currently carries 74 passengers per flight. growth in passengers is expected to be 6 percent annually. new plans will have to be ordered when the company is carrying 90 percent of capacity. how long will it be before the firm must order new planes?
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the future value of an annuity will be larger if 1> the annuity is an ordinary annuity 2> the annuity is an annuity due 3> the payments are made at the beginning of the year 4> the payments are made at the end of the year a. 1 and 3 b. 1 and 4 c. 2 and 3 d. 2 and 4
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time value concepts may be used to determine 1> the annual growth rate in dividends 2> the amount in an ira account after ten years 3> the tax owed on a capital gain a. 1 and 2 b. 1 and 3 c. 2 and 3 d. only 2
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the future value of an annuity is 1> larger the higher the rate of interest 2> smaller the higher the rate of interest 3> larger the greater the number of years 4> smaller the greater the number of years a. 1 and 3 b. 1 and 4 c. 2 and 3 d. 2 and 4
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an annuity is a series of a. rising annual payments b. random payments c. equal payments d. unequal payments
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the present value of an annuity due is not affected by the frequency of compounding.
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the future value of an ordinary annuity will exceed the future value of an annuity due.
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the present value of an annuity increases as the number of years increases.
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the future value of an annuity of $100 at 6 percent for ten years exceeds $1,000.
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if the first payment made by an annuity is today, that is an ordinary annuity and not an annuity due.
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if interest rates are 0 percent, an annuity of $100 for ten years is the same as $1,000 today.
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if a bank pays 2 percent compounded daily, the true rate of interest is greater than 2 percent.
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an investor sells 100 shares short at $43. the sale requires a margin deposit equal to 60 percent of the proceeds of the sale. the company paid a cash dividend of $2 per share. if the investor closed the position at $36, what was the percentage earned or lost on the investment?
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portfolios that offer the highest return for a given level of risk are "efficient."
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the numerical value of beta for the market equals 1.
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the informed investor can expect consistently to outperform the market.