2024年投资学题库资料.doc

Chapter17
Macroeconomic and industry Analysis
1. A top down analysis of a firm starts with ____________. 
D. the global economy
2. An example of a highly cyclical industry is ________. 
A. the automobile industry
3. Demand-side economics is concerned with _______. 
A. government spending and tax levels
B. monetary policy
C. fiscal policy
E. A, B, and C
4. The most widely used monetary tool is ___________. 
C. open market operations
5. The "real", or inflation-adjusted, exchange rate, is 
C. the purchasing power ratio.
6. The "normal" range of price-earnings ratios for the S&P 500 Index is 
D. between 12 and 25
7. Monetary policy is determined by 
C. the board of Governors of the Federal Reserve System.
8. A trough is ________. 
B. a transition from a contraction in the business cycle to the start of an expansion
9. A peak is ________. 
A. a transition from an expansion in the business cycle to the start of a contraction

10. If the economy is growing, firms with high operating leverage will experience __________. 
A. higher increases in profits than firms with low operating leverage.
11. If the economy is shrinking, firms with high operating leverage will experience __________. 
A. higher decreases in profits than firms with low operating leverage.
12. If the economy is growing, firms with low operating leverage will experience __________. 
C. smaller increases in profits than firms with high operating leverage.
13. If the economy is shrinking, firms with low operating leverage will experience __________. 
C. smaller decreases in profits than firms with high operating leverage.
14. Industrial production refers to _________. 
C. the total manufacturing output in the economy.
15. GDP refers to _________. 
D. the total production of goods and services in the economy
16. A rapidly growing GDP indicates a(n) ______ economy with ______ opportunity for a firm to increase sales. 
D. expanding; ample
17. A declining GDP indicates a(n) ______ economy with ______ opportunity for a firm to increase sales. 
A. stagnant; little
18. The average duration of unemployment and changes in the consumer price index for services are _________. 
C. lagging economic indicators
19. A firm in an industry that is very sensitive to the business cycle will likely have a stock beta ___________. 
A. greater than 1.0
20. If the economy were going into a recession, an attractive industry to invest in would be the ________ industry. 
B. medical services
21. The stock price index and contracts and new orders for nondefense capital goods are 
A. leading economic indicators.
22. A firm in the early stages of the industry life cycle will likely have ________. 
B. high risk.
C. rapid growth
E. B and C
23. Assume the U.S. government was to decide to increase the budget deficit. This action will most likely cause __________ to increase 
A. interest rates
B. government borrowing
D. both A and B
24. Assume the U.S. government was to decide to decrease the budget deficit. This action will most likely cause __________ to decrease 
A. interest rates
B. government borrowing
D. both A and B
25. Assume that the Federal Reserve decreases the money supply. This action will cause ________ to decrease. 
C. investment in the economy
26. If the currency of your country is depreciating, the result should be to ______ exports and to _______ imports. 
B. stimulate, discourage
27. If the currency of your country is appreciating, the result should be to ______ exports and to _______ imports. 
C. discourage, stimulate
28. 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. 
A. increase, increase
29. The North American Industry Classification System (NAICS) 
A. are for firms that operate in the NAFTA region.
B. group firms by industry.
D. A and B.
30. If interest rates increase, business investment expenditures are likely to ______ and consumer durable expenditures are likely to _________. 
D. decrease, decrease
31. Fiscal policy generally has a _______ direct impact than monetary policy on the economy, and the formulation and implementation of fiscal policy is ______ than that of monetary policy. 
B. more, slower

32. Fiscal policy is difficult to implement quickly because 
A. it requires political negotiations.
B. much of government spending is nondiscretionary and cannot be changed.
D. A and B.
33. Inflation 
A. is the rate at which the general level of prices is increasing.
B. rates are high when the economy is considered to be "overheated".
D. A and B.
 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 cents per widget. Firm B has total fixed costs of $240,000 and variable costs of 75 cents 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.
34. If the economy enters a recession, the after-tax profit of Firm A will be ________. 
C. $30,000
35. If the economy enters a recession, the after-tax profit of Firm B will be _______. 
E. none of the above
36. If the economy is strong, the after-tax profit of Firm A will be _______. 
D. $60,000
37. If the economy is strong, the after-tax profit of Firm B will be __________. 
C. $36,000
38. Calculate firm A's degree of operating leverage. 
A. 11.0
39. Calculate firm B's degree of operating leverage. 
C. 29.86
40. Classifying firms into groups, such as _________ provides an alternative to the industry life cycle. 
A. slow-growers
B. stalwarts
D. A and B
41. Supply-side economists wishing to stimulate the economy are most likely to recommend 
D. a decrease in the tax rate.
42. Which of the following are not examples of defensive industries? 
B. durable goods producers.
43. Which of the following are examples of defensive industries? 
A. food producers.
C. pharmaceutical firms.
D. public utilities
E. A, C and D
44. ________ is a proposition that a strong proponent of supply side economics would most likely stress. 
B. Higher marginal tax rates promote economic inefficiency and thereby retard aggregate output as they encourage investors to undertake low productivity projects with substantial tax shelter benefits
45. The industry life cycle is described by which of the following stage(s)? 
A. start-up.
B. consolidation.
D. A and B.
46. In the start-up stage of the industry life cycle 
A. it is difficult to predict which firms will succeed and which firms will fail.
B. industry growth is very rapid.
D. A and B.
47. In the consolidation stage of the industry life-cycle 
C. the performance of firms will more closely track the performance of the overall industry.
48. In the maturity stage of the industry life cycle 
A. the product has reached full potential.
B. profit margins are narrower.
C. producers are forced to compete on price to a greater extent.
E. A, B, and C.
49. In the decline stage of the industry life cycle 
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.
E. A, B, and C.
50. A variety of factors relating to industry structure affect the performance of the firm, including 
A. threat of entry.
B. rivalry between existing competitors.
E. A and B.
51. The process of estimating the dividends and earnings that can be expected from the firm based on determinants of value is called 
D. fundamental analysis.
52. The emerging market exhibiting the highest growth in real GDP in was 
A. China
53. The emerging stock market exhibiting the highest U.S. dollar return in was 
A. China
54. The life cycle stage in which industry leaders are likely to emerge is the 
C. consolidation stage.

55. Investment manager Peter Lynch refers to firms that are in bankruptcy or soon might be as 
E. turnarounds.
56. A top-down analysis of a firm's prospects starts with 
D. an assessment of the broad economic environment.
57. Over the period 1999-, which of the following countries had a change in its real exchange rate that was favorable for U.S. consumers who want to buy its goods? 
E. Japan
58. Over the period 1999-, which of the following countries had a change in its real exchange rate that was most unfavorable for U.S. consumers who want to buy its goods? 
A. Canada
59. In recent years, P/E multiples have 
B. risen dramatically.
60. In recent years, P/E multiples for S&P 500 companies have 
D. ranged from 12 to 25.
61. The industry with the highest ROE in was 
D. iron/steel.
62. The industry with the lowest ROE in was 
E. airlines.
63. The industry with the lowest return in was 
A. home construction.
64. The industry with the highest return in was 
B. oil equipment.
65. Investors can ______ invest in an industry with the highest expected return by purchasing ______. 
B. not; industry-specific iShares
66. Which of the following are key economic statistics that are used to describe the state of the macroeconomy?
I) gross domestic product
II) the unemployment rate
III) inflation
IV) consumer sentiment
V) the budget deficit 
E. I, II, III, IV, and V
67. An example of a positive demand shock is 
E. a decrease in tax rates.
68. An example of a negative demand shock is 
A. a decrease in the money supply.
B. a decrease in government spending.
E. A and B.
69. During which stage of the industry life cycle would a firm experience stable growth in sales? 
A. Consolidation
70. The emerging stock market exhibiting the highest local currency return in was 
B. China
E. China
71. Sector rotation 
C. is shifting the portfolio more heavily toward an industry or sector that is expected to perform well in the future.
72. According to Michael Porter, there are five determinants of competition. An example of _____ is when new entrants to an industry our pressure on prices and profits. 
A. Threat of Entry 
73. According to Michael Porter, there are five determinants of competition. An example of _____ is when competitors seek to expand their share of the market. 
B. Rivalry between Existing Competitors
74. 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. 
C. Pressure from Substitute Products
75. According to Michael Porter, there are five determinants of competition. An example of _____ is when a buyer purchases a large fraction of an industry's output and can demand price concessions. 
D. Bargaining power of Buyers
76. Assume the U.S. government was to decide to increase the budget deficit. This action will most likely cause __________ to increase 
A. interest rates
B. government borrowing
D. both A and B
77. If interest rates decrease, business investment expenditures are likely to ______ and consumer durable expenditures are likely to _________. 
A. increase, increase
78. An example of a defensive industry is ________. 
B. the tobacco industry
C. the food industry
E. B and C 
 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 cents per widget. Firm D has total fixed costs of $400,000 and variable costs of 50 cents per widget. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 widgets. If the economy enters a recession, each firm will sell 1,400,000 widgets. 
79. If the economy enters a recession, the total revenue of Firm C will be ________. 
A. $1,680,000
80. If the economy enters a recession, the total cost of Firm C will be ________. 
B. $1,170,000
81. If the economy enters a recession, the before tax profit of Firm C will be ________. 
C. $510,000
82. If the economy enters a recession, the tax of Firm C will be ________. 
D. $204,000
83. If the economy enters a recession, the after tax profit of Firm C will be ________. 
E. $306,000
84. If the economy is strong, the total revenue of Firm C will be ________. 
D. $2,400,000
85. If the economy is strong, the total cost of Firm C will be ________. 
C. $1,305,000
86. If the economy is strong, the before tax profit of Firm C will be ________. 
B. $1,050,000
87. If the economy is strong, the tax of Firm C will be ________. 
A. $420,000
88. If the economy is strong, the after-tax profit of Firm C will be _______. 
E. $630,000
89. If a firm's sales decrease by 15% and profits decrease by 20% during a recession, the firms operating leverage is ____________? 
A. 1.33
Short Answer Questions

90. Discuss the tools of the U.S. government's "demand-side" policy. Include in your discussion of these tools the relative advantages and disadvantages of each in terms of the effect of the use of these tools on the economy. 
The two tools of the government's "demand-side" policy are fiscal and monetary policy. Fiscal policy is the use of government spending and taxing for the specific purpose of stabilizing the economy. Fiscal policy, once enacted, has the most direct and immediate effect on the economy. However, the formulation and implementation of fiscal policy is extremely slow, as such policy must be approved by both the legislative and executive branches of the federal government. Monetary policy consists of actions taken by the Board of Governors of the Federal Reserve System (FRS) to influence the money supply and/or interest rates. Monetary policy is relatively easy to formulate and to implement, but has less direct impact on the economy than fiscal policy. The most widely used tool of the FRS is the open market operations, in which the Fed buys or sells bonds for the Fed's account. Buying securities increases the money supply; selling securities decreases the money supply. Open market operations occur daily. Other FRS tools include adjusting the discount rate, which is the interest rate the Fed charges banks on short-term loans, and altering reserve requirements, which are the fraction of deposits that banks must maintain in cash deposits with the Fed. Reductions in the money supply signal an expansionary monetary policy; lowering reserve requirements increase the money supply, and thus, stimulate the economy. The Fed walks a fine line: expansionary monetary policy probably will lower interest rates and stimulate investment and consumption in the short run, but ultimately inflation probably will result.
Feedback: The rationale of this question is to ascertain whether the student has an understanding of the basic principles of macroeconomics.91. Discuss the National Bureau of Economic Research (NBER)'s indexes of economic indicators, and how each of the categories of these indicators might be used by the sec