INSTRUCTIONS
I.
SHOW YOUR WORK.
II.
YOUR GRADE IS BASED ON YOUR
CORRECTNESS, CONVICTION, ELABORATION AND ELUCIDATION.
III. ALL QUESTIONS HAVE THE SAME WEIGHT. YOU HAVE TO ANSWER
7
QUESTIONS. YOU OUGHT TO DO FOUR PROBLEMS. FURTHERMORE, YOU OUGHT TO ANSWER THE FIRST ESSAY. THEN, YOU MAY CHOOSE TWO MORE PROBLEMS OR ESSAYS OF YOUR CHOICE.
IV. THE ESSAYS SHOULD BE ABOUT ONE PAGE SINGLE SPACED.
PROBLEMS
1.
We know the stock market has a mean ROR of .12. We have the following information for the smart phone industry. The assets, debt, sales, and net profit are $2, $.4, $.5 and $.3 trillion. The industry keeps $250 billion of its profit and pays $50 billion to the shareholders, now. The unlevered bheta is 1.3 and the tax rate is .35. Also, the T bond rate is .02. We want to compute the ROE and the growth rate for the smart phone industry, as well as the industry’s market value.
2. Problem #4 on page 411.
3. Problem #8 on page 412.
4. Problem #5 on page 733
5. Problem #6 on page 734
ESSAYS
1.Expound on this quote. “The economy may easily slow down or expand in the next couple years. The reason is that there are a few optimistic factors, but there also are a few pessimistic ones. Among the positive variables are first, expansionary monetary policy, extremely strong fiscal policy with the stimulus bills passed in the last few months and a lot of savings, which have not been spent due to the virus. However, there are three key weaknesses. One is the high incidence of the virus and the corollary that people are afraid to spend by going out. The second is the woeful investment in infrastructure of all sorts, which has occurred in the last four decades. The third is the increase in the last four decades in inequality of income and wealth, which makes the masses, poor and most middle income people, lose substantial buying power.
2. How does monetary policy and financial variables, generally, affect the economy, the stock and bond markets? Does money determine those markets or is it the other way around according to empirical evidence?
3.Analyze the different indicators we have . You do not need to talk about all the indicators. Mention two of each category of leading, coincidental and lagging. Compare and contrast the 3 types.
4. Elucidate the factors influencing the four components of the GDP. What are the key sub components of the components? Describe how important each component is and why.
5. Talk on real investment, as a component of GDP. What factors influence the components that compose it? What influences those
?
6. There are a few tools we have to predict the consumption part of GDP. A few of them are consumer sentiment and consumer confidence. Talk about advantages and disadvantages of those tools, as well as their function. Components
7. a)Discuss the rate of return and risk of an industry inter temporally. How do industries compare at the same time. Be thorough.
b) Why do we devote so many resources to forecast the GDP when it does not predict the financial markets?
8. Elaborate on competitive analysis. How do the five factors influence the toy industry?
9. Compare and contrast the electric vehicle versus the auto industry (non-electric vehicles) in terms of their life cycle.
10. Analyze the industry of smart phones on structural aspects. Structural issues should include things such as demographics, psychographics, regulation and technology. Limit your presentation to only 2 demographic issues.