FIN 350 Week 7 Quiz StrayerClick on the Link Below to Purchae !" #ra$e$ Coure %aterialhttp://hwgala.com/FIN-350-Week-7-Quiz-Strayer-0!.htmQuiz & Cha'ter (( an$ (3

Cha'ter (()Stock *aluation an$ +ik". #he price-ear%i%g& 'aluatio% metho( applie& the )))) price-ear%i%g& ratio to )))) ear%i%g& per &hare i% or(er to 'alue the *irm+& &tock.a. *irm+&, i%(u&try-. *irm+&, *irm+&c. a'erage i%(u&try, i%(u&try(. a'erage i%(u&try, *irm+& .. / *irm i& e0pecte( to ge%erate ear%i%g& o* 1.... per &hare %e0t year. #he mea% ratio o* &hare price to e0pecte( ear%i%g& o* competitor& i% the &ame i%(u&try i& "5. 2a&e( o% thi& i%*ormatio%3 the 'aluatio% o* the *irm+& &hare& -a&e( o% the price-ear%i%g& 4567 metho( i&a. 1.....-. 1!.7!.c. 133.30.(. %o%e o* the a-o'e 3. #he 56 metho( to &tock 'aluatio% may re&ult i% a% i%accurate 'aluatio% *or a *irm i* error& are ma(e i% *oreca&ti%g the *irm+& *uture ear%i%g& or i% choo&i%g the i%(u&try compo&ite u&e( to (eri'e the 56 ratio.a. #rue-. Fal&e . 2olwork I%c. i& e0pecte( to pay a (i'i(e%( o* 15 per &hare %e0t year. 2olwork+& (i'i(e%(& are e0pecte( to grow -y 3 perce%t a%%ually. #he re8uire( rate o* retur% *or 2olwork &tock i& "5 perce%t. 2a&e( o% the (i'i(e%( (i&cou%t mo(el3 a *air 'alue *or 2olwork &tock i& 1)))) per &hare.a. 33.33-. "!!.!7c. ".!7(. !0.00 5. 5rot&ky I%c. 9u&t pai( a (i'i(e%( o* 1...0 per &hare. #he (i'i(e%( growth rate *or 5rot&ky+&(i'i(e%(& i& 3 perce%t per year. I* the re8uire( rate o* retur% o% 5rot&ky &tock i& ". perce%t3the &tock &houl( -e 'alue( at 1)))) per &hare accor(i%g to the (i'i(e%( (i&cou%t mo(el.a. ..-. .5.":c. ":.::(. 75.53 !. #he limitatio%& o* the (i'i(e%( (i&cou%t mo(el are more pro%ou%ce( whe% 'alui%g &tock&a. that pay mo&t o* their ear%i%g& a& (i'i(e%(&.-. that retai% mo&t o* their ear%i%g&.c. that ha'e a lo%g hi&tory o* (i'i(e%(&.(. that ha'e co%&ta%t ear%i%g& growth. 7. ;a%&el I%c. retai%& mo&t o* it& ear%i%g&. #he compa%y curre%tly ha& ear%i%g& per &hare o* 1"". ;a%&el e0pect& it& ear%i%g& to grow at a co%&ta%t rate o* . perce%t per year. Furthermore3 the a'erage 56 ratio o* all other *irm& i% ;a%&el+& i%(u&try i& ".. ;a%&el i& e0pecte( to pay (i'i(e%(& per &hare o* 13.50 (uri%g each o* the %e0t three year&. I* i%'e&tor& re8uire a "0 perce%t rate o* retur% o% ;a%&el &tock3 a *air price *or ;a%&el &tock to(ay i& 1)))).a. ""3.Ba. 5.. perce%t-. "".7 perce%tc. "!.7 perce%t(.perce%te. "0.. perce%t .5. /ccor(i%g to the te0t3 other thi%g& -ei%g e8ual3 &tock price& o* @.S. *irm& primarily i%'ol'e( i% e0porti%g coul( -e )))) a**ecte( -y a weak (ollar. Stock price& o* @.S. importi%g *irm& coul( -e )))) a**ecte( -y a weak (ollar.a. a('er&ely, *a'ora-ly-. *a'ora-ly, a('er&elyc. *a'ora-ly, *a'ora-ly(. a('er&ely, a('er&ely .!. #he (ema%( -y *oreig% i%'e&tor& *or the &tock o* a @.S. *irm &ol( o% a @.S. e0cha%ge may -e higher whe% the (ollar i& e0pecte( to ))))3 other thi%g& -ei%g e8ual. 4/&&ume the *irm+&operatio%& are u%a**ecte( -y the 'alue o* the (ollar.7a. &tre%gthe%-. weake%c. &ta-ilize(. 2 a%( = .7. / higher -eta o* a% a&&et re*lect&a. lower ri&k.-. lower co'aria%ce -etwee% the a&&et+& retur%& a%( market retur%&.c. higher co'aria%ce -etwee% the a&&et+& retur%& a%( the market retur%&.(. %o%e o* the a-o'e .:. #he CAa%uary e**ectC re*er& to a largea. ri&e i% the price o* &mall &tock& i% Aa%uary.-. (ecli%e i% the price o* &mall &tock& i% Aa%uary.c. (ecli%e i% the price o* large &tock& i% Aa%uary.(. ri&e i% the price o* large &tock& i% Aa%uary. .orga% &tock ha& a% a'erage retur% o* "5 perce%t3 a -eta o* ..53 a%( a &ta%(ar( (e'iatio% o* retur%& o* .0 perce%t. #he #rey%or i%(e0 o* >orga% &tock i&a. 0.0.-. 0.05.c. 0.35.(. 0.03.e. %o%e o* the a-o'e 3. Dilo &tock ha& a% a'erage retur% o* "5 perce%t3 a -eta o* ..53 a%( a &ta%(ar( (e'iatio% o* retur%& o* .0 perce%t. #he Sharpe i%(e0 o* Dilo &tock i&a. 0.3!.-. 0.35.c. 0..:.(. 0.5.e. %o%e o* the a-o'e 35. Sor'i%o =o. i& e0pecte( to o**er a (i'i(e%( o* 13.. per &hare per year *ore'er. #he re8uire(rate o* retur% o% Sor'i%o &tock i& "3 perce%t. #hu&3 the price o* a &hare o* Sor'i%o &tock3 accor(i%g to the (i'i(e%( (i&cou%t mo(el3 i& 1)))).a. .0!-. ."!c. 0.!3(. ..!.e. %o%e o* the a-o'e 3!. Ea%(le &tock 9u&t pai( a (i'i(e%( o* 1.7! per &hare a%( pla%& to pay a (i'i(e%( o* 15 per &hare %e0t year3 which i& e0pecte( to i%crea&e -y 3 perce%t per year &u-&e8ue%tly. #he re8uire( rate o* retur% i& "5 perce%t. #he 'alue o* Ea%(le &tock3 accor(i%g to the (i'i(e%( (i&cou%t mo(el3 i& 1)))).a. 3u%icipal 2o%( I%(e0(. &elli%g, a >u%icipal 2o%( I%(e0 .7. #he %et gai% or lo&& o% a *uture& co%tract *or a &tock i%(e0 that i& %ot clo&e( out i& -a&e( o% the (i**ere%ce -etwee% the *uture& price whe% the i%itial po&itio% wa& create( a%( the *uture& price ata. the &ettleme%t (ate.-. the (ate at which the *uture& price reache& it& ma0imum.c. the (ate at which the *uture& price reache& it& mi%imum.(. the (ate three mo%th& -eyo%( the (ate whe% the i%itial po&itio% wa& take%. .:. #he 'alue o* a% SO5 500 *uture& co%tract i& 1500 time& the i%(e0. /&&ume the *uture& price o% the SO5 500 i%(e0 i& "!". at the time o* purcha&e. I* the i%(e0 price i& 1"!"< whe% the po&itio% i& clo&e( out3 the gai% i&a. 1700.-. 173000.c. 133"arket-. Fi8ui(ityc. =re(it(. 2a&i&e. No%e o* the a-o'e 3. #ra(i%g re&trictio%& impo&e( o% &peci*ic &tock& or &tock i%(ice& are re*erre( to a&a. i%(e0 -u&ter&.-. i%(e0 optio%&.c. circuit -reaker&.(. protecti'e co'e%a%t&. 35. Fi%a%cial le'erage3 whe% u&e( i% a&&ociatio% with a *uture& co%tract3 )))) the po&iti'e retur%& a%( )))) lo&&e&.a. mag%i*ie&, re(uce&-. re(uce&, mag%i*ie&c. mag%i*ie&, mag%i*ie&(. re(uce&, re(uce& 3!. =urre%cy *uture& may -e purcha&e( to he(ge )))) or to capitalize o% the e0pecte( )))) o* that curre%cy agai%&t the (ollar.a. recei'a-le&, appreciatio%-. recei'a-le&, (epreciatio%c. paya-le&, (epreciatio%(. paya-le&, appreciatio% 37. #he ri&k that the po&itio% -ei%g he(ge( -y a *uture& po&itio% i& %ot a**ecte( i% the &ame ma%%er a& the i%&trume%t u%(erlyi%g the *i%a%cial *uture& co%tract3 i& re*erre( to a&a. market ri&k.-. li8ui(ity ri&k.c. (e*ault ri&k.(. -a&i& ri&k. 3:. Ly%amic a&&et allocatio% i%'ol'e& the &witchi%g -etwee% ri&ky a%( low-ri&k i%'e&tme%t& -y i%&titutio%al i%'e&tor& o'er time i% re&po%&e to cha%gi%g e0pectatio%&.a. #rue-. Fal&e 3