Question

P/E ratios are influenced by a company's a. Growth rate                         b. Risk c. Capital structure    &nb

P/E ratios are influenced by a company's
a. Growth rate                         b. Risk
c. Capital structure                  d. Management           e. All of the above and more

1According to the National Bureau of Economic Research a recession is two or more quarters of

a.negative nominal Gross Domestic Product (GDP) growth

b.negative real GDP growth

c.a rate of inflation which exceeds real GDP growth

d.none of the above

13.       The goal of an efficient portfolio is to

a.maximize risk for a given level of return

b.maximize risk in order to maximize profit

c.minimize profit in order to minimize risk

d.none of the above

2An investment requires a total return that comprises:
A. a real rate of return and compensation for inflation.
B. a real rate of return, compensation for inflation, and a risk premium.
C. compensation for inflation and a risk premium.
D. a real rate of return, compensation for inflation, a risk premium, and compensation for time and effort devoted to researching alternative investments.

The minimum holding period to qualify for the long-term capital gains treatment is:
A. 1 month.                             B. 12 months.              C. 18 months.                          D. 24 months

6.Economic analysis is important for investors, because they need to anticipate
A. changes in corporate profits due to business cycle impacts.
B. growth in various industry segments based on changing economic trends.
C. how foreign trade might affect U.S. companies.
D. All of the above

7.         What factors must be considered in choosing between investment alternatives?
A. Risk and liquidity
B. Interest or dividends versus capital gains
C. Time frame for managing funds and evaluating performance and tax effects
D. Safety of principal
E. All of the above

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Homework Answers

Answer #1

Answer: e) All of the above and more.

P/E ratios are influenced by a companie's sales growth, volatality or the risk of performance, capital structure as in the combination of debt and equity, managerial decisions etc.

Answer: a) Negative real GDP growth.

Recession is said to have taken place when there is neagtive GDP growth for two or more consecutive quarters.

Answer: d) None of the above

The goal of an effecient portfolio is to minimize the risk for a given level of return and never to maximize such risk. Thus all the given answers are incorrect.

Answer:B

An investment requires a total return in long run which comprises of all the given eliments of good rate of return, compensation to inflation and a risk premium.

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