Corporate Finance
12th Edition
ISBN: 9781259918940
Author: Ross, Stephen A.
Publisher: Mcgraw-hill Education,
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Chapter 12, Problem 10CQ
Summary Introduction
To determine: The issue with measuring the performance of U.S growth stock manager against the benchmark composed British stocks.
Introduction:
A factor model is a numerical computation of the level to which
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(c) Studies show that the correlations between domestic stocks are greater than the correlations
between domestic and foreign stocks. Explain why this is likely to be the case. What implications
does this fact have for international portfolio investors?
Which of the following refers to the Sharpe performance measure?
It measures the sensitivity of a national market to world market movements.
It shows an increase in the portfolio return at international level.
It reflects the increase in the portfolio return at domestic-equivalent risk level.
It estimates the excess return per standard deviation risk.
Analyst forecasts which focus on a top-down approach to forecasting future performance are most likely paying attention to:
A. Macroeconomic factors such as gross domestic product (GDP)
B. Signals from individual companies within an industry first
OC. Microeconomic factors such as dividend yields on bio-technology stocks (shares)
Chapter 12 Solutions
Corporate Finance
Ch. 12 - Prob. 1CQCh. 12 - Prob. 2CQCh. 12 - Prob. 3CQCh. 12 - Prob. 4CQCh. 12 - Market Model versus APT What are the differences...Ch. 12 - APT In contrast to the CAPM, the APT does not...Ch. 12 - CAPM versus APT What is the relationship between...Ch. 12 - Prob. 8CQCh. 12 - Data Mining What is data mining? Why might it...Ch. 12 - Prob. 10CQ
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- When analyzing key macroeconomics to assess GDP growth/decline, how would you measure the performance relative to sequential and year-to-year data?How will your analysis assist you in determining the direction of the stock market?Why do you consider the relationship between the economy and the stock market an integral part of the investment process? Explain your reasoning.arrow_forwardAssuming that the mandate to a portfolio manager was to invest in a broadly diversified portfolio of U.S. stocks, which two or three indexes should be considered as an appropriate benchmark? Why?arrow_forwardWhich of the following is considered to a leading indicator of a countrys economy? a. money supply b. stock prices c. duration of unemployment d. interest rate spreadarrow_forward
- Why microsoft is a best Uk stock marketing?arrow_forwardWhich is a benefit of including international stocks in an investment portfolio? A. Greater ability to diversify B. Political risk exposure C. Exchange rate risk D. Financial riskarrow_forwardYou are considering a sector-neutral value factor strategy where you buy the cheapest stocks (lowest P/Z) and short-sell the most expensive stocks (highest P/Z) within an industry. Stocks are value weighted on both the long and the short side. In this case, O A. You are overweighting certain industries and underweighting other industries (relative to the market portfolio) depending on the average P/Z ratio of that industry. O B. The weight invested in each industry is (roughly) proportional to the weight of that industry in the market portfolio. O. You are overweighting certain industries and underweighting other industries (relative to the market portfolio) depending on the %earnings growth rate of that industry. O D. Each industry receives equal weight O E. You are overweighting small stocks relative to large stocks the market portfolio.arrow_forward
- You manage a portfolio of U.S. and global stocks. You are considering replacing global stocks with short-term US Treasury securities. Explain why this is or isn’t a good move.arrow_forwardWhen considering a top-down approach to fundamental analysis, the impact of macroeconomic factors on a stock’s price can have which of the following effects? an increase in real GDP is followed by improvement in current and expected future profits for companies, leading to higher stock price. an increase in real GDP is followed by performance of industries and subsequent improvement in current and expected future profits for companies, leading to higher stock prices. an increase in real GDP, followed by a significant performance of cyclical industries such as automobile and consumer discretionary, will lead to higher stock prices.arrow_forwardWhich of the following variables do Fama and French claim do a better job explaining stock returns than beta? 1. Book-to-market ratio, II. Unexpected change in industrial production, III. Firm size O a. I and II only Ob. I and Ill only OC. I, II, and III O d. I only Not yet answeredarrow_forward
- Which asset class has the highest average historical returns and also the highest risk as measured by standard deviation? US treasury bills Large company stocks Small company stocks Long-term corporate bonds Long-term government bondsarrow_forwardThe file Fortune500 contains data for profits and market capitalizations from a recent sample of firms in the Fortune 500 a. Prepare a scatter diagram to show the relationship between the variables Market Capitalization and Profit in which Market Capitalization is on the vertical axis and Profit is on the horizontal axis. Comment on any relationship between the variables. b. Create a trendline for the relationship between Market Capitalization and Profit. What does the trendline indicate about this relationship?arrow_forward6. In order to predict stock price movements security analysts, use key economic statistics to describe the domestic economy. Critically discuss any 5 key economic statistics security analysts use in emerging markets.arrow_forward
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