Q1: Consider two firms producing smart phones. One uses a highly automated robotics process, whereas the other uses workers on an assembly line and pays overtime when there is heavy production demand. a. Which firm will have higher profits in a recession? In a boom? b. Which firm’s stock will have a higher beta?

7. More on ratio analysis Analysts and investors often use return on equity (ROE) to compare profitability of a company with other firms in the industry. ROE is considered a very important measure, and managers strive to make the company’s ROE numbers look good. If a firm takes steps that increase its expected future ROE, its stock price will    increase.   Based on your understanding of the uses and limitations of ROE, a rational investor is likely to prefer an investment option that has: High ROE and high risk   High ROE and low risk     Suppose you are trying to decide whether to invest in a company that generates a high expected ROE, and you want to conduct further analysis on the company’s performance. If you wanted to conduct a comparative analysis for the current year, you would: Compare the firm’s financial ratios for the current year with its ratios in previous years   Compare the firm’s financial ratios with other firms in the industry for…

A competitive firm O Has the market power to compete effectively. O Confronts a downward-sloping firm demand curve. O Is large enough relative to the market to be taken into account by competitors. OIs a price taker.

You have collected the following NH-NL indicator data: . If you are an technician following a momentum-based strategy, are you buying or selling today? A momentum-based trader would be selling because the NH-NL indicator indicates that new lows are now outpacing new lows, with a continuing strong upward trend. (Select from the drop-down menus.) Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Day NH-NL Indicator 1 (yesterday) 104 2 99 3 61 10 4567806 42 -18 -43 -80 -84 9 -91 -69 - ☑

What statistic would we use if we had one independent variable, geographic location (North, South, East, West), and one dependent variable (satisfaction with living environment, Yes or No)?

You are the CFO of a profitable firm that is financially constrained. The stock market is currently going through a boom phase (assume this is a bubble). From what you have learned in this course, you know that the rational decision would be to issue new shares and use this income to pursue positive NPV projects. Before you make this decision, what is the most important variable that you would examine Assume you have information on all these variables. Select one: O a. Market Q O b. Fundamental Q O c. Elasticity of price demand for common shares O d. Cash Savings

You are interested in estimating a beta for Digital Universe Company. Since they are a privately held firm, you do not have access to the necessary data. If you want to estimate a beta for DUC, you will have to work with some comparable firm data.    Un levered  Beta  for companyJS =1.20 Un levered  Beta  for company YS= 1.07 Un levered  Beta  for company ER= 0.84 Un levered  Beta  for company HMH= 0.82 b) Estimate an equally-weighted and sales-weighted average unlevered betas using the data from the unlevered beta above.

Industry is evaluating two different manufacturing systems (Alpha and Beta):           Possible Outcome Probability Rate of Return Alpha System Rate of Return Beta System Optimistic .35 .40 .15 Most likely .45 .25 .30 Pessimistic .20 (.10) (.20)   Which manufacturing system provides the lowest expected return? why? Alpha System Beta System Not enough information