投资学10版习题答案17.docx

投资学10版习题答案17.docx

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投资学10版习题答案17

CHAPTER17:

MACROECONOMICANDINDUSTRYANALYSIS

PROBLEMSETS

1.Expansionary（looser）monetarypolicytolowerinterestrateswouldstimulatebothinvestmentandexpendituresonconsumerdurables.Expansionaryfiscalpolicy（i.e.,lowertaxes,increasedgovernmentspending,increasedwelfaretransfers）wouldstimulateaggregatedemanddirectly.

2.AdepreciatingdollarmakesimportedcarsmoreexpensiveandAmericancarslessexpensivetoforeignconsumers.ThisshouldbenefittheU.S.autoindustry.

3.Thisexerciseislefttothestudent;answerswillvary.Successfulstudentswilllikelydiscussanindustry'sprofitability,leverage,andgrowthopportunities,especiallyinrelationtogeneralmacroeconomicconditions.

4.Atop-downapproachtosecurityvaluationbeginswithananalysisoftheglobalanddomesticeconomy.Analystswhofollowatop-downapproachthennarrowtheirattentiontoanindustryorsectorlikelytoperformwell,giventheexpectedperformanceofthebroadereconomy.Finally,theanalysisfocusesonspecificcompanieswithinanindustryorsectorthathasbeenidentifiedaslikelytoperformwell.Abottom-upapproachtypicallyemphasizesfundamentalanalysisofindividualcompanystocksandislargelybasedonthebeliefthatundervaluedstockswillperformwellregardlessoftheprospectsfortheindustryorthebroadereconomy.Themajoradvantageofthetop-downapproachisthatitprovidesastructuredapproachtoincorporatingtheimpactofeconomicandfinancialvariables,ateverylevel,intoanalysisofacompany’sstock.Onewouldexpect,forexample,thatprospectsforaparticularindustryarehighlydependentonbroadereconomicvariables.Similarly,theperformanceofanindividualcompany’sstockislikelytobegreatlyaffectedbytheprospectsfortheindustryinwhichthecompanyoperates.

5.Firmswithgreatersensitivitytobusinesscyclesareinindustriesthatproducedurableconsumergoodsorcapitalgoods.Consumersofdurablegoods（e.g.,automobiles,majorappliances）aremorelikelytopurchasetheseproductsduringaneconomicexpansionbutcanoftenpostponepurchasesduringarecession.Businesspurchasesofcapitalgoods（e.g.,purchasesofmanufacturingequipmentbyfirmsthatproducetheirownproducts）declineduringarecessionbecausedemandforthefirms’endproductsdeclinesduringarecession.

6.a.GoldMining.Goldtraditionallyisviewedasahedgeagainstinflation.Expansionarymonetarypolicymayleadtoincreasedinflationandthuscouldenhancethevalueofgoldminingstocks.

b.Construction.Expansionarymonetarypolicywillleadtolowerinterestrateswhichoughttostimulatehousingdemand.Theconstructionindustryshouldbenefit.

7.Supply-sideeconomistsbelievethatareductioninincometaxrateswillmakeworkersmorewillingtoworkatcurrentorevenslightlylower（gross-of-tax）wages.Suchaneffectoughttomitigatecostpressuresontheinflationrate.

8.a.Whenbothfiscalandmonetarypoliciesareexpansive,theyieldcurveissharplyupwardsloping（i.e.short-termratesarelowerthanlong-termrates）andtheeconomyislikelytoexpandinthefuture.

9.a.Whenwealthisredistributedthroughthegovernment’staxpolicy,economicinefficiencyiscreated.Taxpoliciesshouldpromoteeconomicgrowthasmuchaspossible.

10.a.Theroboticsprocessentailshigherfixedcostsandlowervariable（labor）costs.Therefore,thisfirmwillperformbetterinaboomandworseinarecession.Forexample,costswillriselessrapidlythanrevenuewhensalesvolumeexpandsduringaboom.

b.Becauseitsprofitsaremoresensitivetothebusinesscycle,theroboticsfirmwillhavethehigherbeta.

11.a.Housingconstruction（cyclicalbutinterest-ratesensitive）:

（iii）Healthyexpansion

b.Healthcare（anoncyclicalindustry）:

（i）Deeprecession

c.Goldmining（counter-cyclical）:

（iv）Stagflation

d.Steelproduction（cyclicalindustry）:

（ii）Superheatedeconomy

12.a.Oilwellequipment:

Relativedecline（Environmentalpressures,declineineasilydevelopednewoilfields）

b.Computerhardware:

Consolidation

c.Computersoftware:

Consolidation

d.Geneticengineering:

Start-up

e.Railroads:

Relativedecline

13.a.GeneralAutos.Pharmaceuticalsarelessofadiscretionarypurchasethanautomobiles.

b.FriendlyAirlines.Travelexpenditureismoresensitivetothebusinesscyclethanmovieconsumption.

14.Theindexofconsumerexpectationsisausefulleadingeconomicindicatorbecause,ifconsumersareoptimisticaboutthefuture,theywillbemorewillingtospendmoney,especiallyonconsumerdurables,whichwillincreaseaggregatedemandandstimulatetheeconomy.

15.Laborcostperunitisausefullaggingindicatorbecausewagestypicallystartrisingonlywellintoaneconomicexpansion.Atthebeginningofanexpansion,thereisconsiderableslackintheeconomyandoutputcanexpandwithoutemployersbiddingupthepriceofinputsorthewagesofemployees.Bythetimewagesstartincreasingduetohighdemandforlabor,theboomperiodhasalreadyprogressedconsiderably.

16.TheexpirationofthepatentmeansthatGeneralWeedkillerswillsoonfaceconsiderablygreatercompetitionfromitscompetitors.Wewouldexpectpricesandprofitmarginstofallandtotalindustrysalestoincreasesomewhataspricesdecline.Theindustrywillprobablyentertheconsolidationstageinwhichproducersareforcedtocompetemoreextensivelyonthebasisofprice.

17.a.Expectedprofit=Revenues–Fixedcosts–Variablecosts

=$120,000–$30,000–[（1/3）$120,000]=$50,000

b.

c.Ifsalesareonly$108,000,profitwillfallto:

$108,000–$30,000–[（1/3）$108,000]=$42,000

Thisisa16%declinefromtheforecastedvalue.

d.Thedecreaseinprofitis16%=DOL×10%dropinsales.

e.Profitmustdropmorethan100%toturnnegative.Forprofittofall100%,revenuemustfallby:

Therefore,revenuewouldbeonly37.5%oftheoriginalforecast.Atthislevel,revenuewillbe:

0.375$120,000=$45,000

f.Ifrevenueis$45,000,profitwillbe:

$45,000–$30,000–（1/3）$45,000=$0

18.Equitypricesarepositivelycorrelatedwithjobcreationorlongerworkweeks,aseachnewdollarearnedmeansmorewilllikelybespent.Highconfidencepresageswellforspendingandstockprices.

19.a.Stockpricesareoneoftheleadingindicators.Onepossibleexplanationisthatstockpricesanticipatefutureinterestrates,corporateearnings,anddividends.Anotherpossibleexplanationisthatstockpricesreacttochangesintheotherleadingeconomicindicators,suchaschangesinthemoneysupplyorthespreadbetweenlong-termandshort-terminterestrates.

20.a.Industrialproductionisacoincidentindicator;theothersareleading.

21.b.Ifhistoricalreturnsareused,thearithmeticandgeometricmeansofreturnsareavailable.Thegeometricmeanispreferredformultiperiodhorizonstoobservelong-termtrends.Analternativetotheequityriskpremiumistouseamovingaverageofrecenthistoricalmarketreturns.Thiswillrevealalowexpectedequityriskpremiumwhentimeshavebeenbad,whichiscontrarytoinvestorexpectations.Whenusinghistoricaldata,thereisatrade-offbetweenlongandshorttimespans.Shorttimespansarehelpfultoreducetheimpactofregimechanges.Longtimespansprovidebetterstatisticaldatathatarelesssensitive.

22.a.Foreignexchangeratescansignificantlyaffectthecompetitivenessandprofitabilityforagivenindustry.Forindustriesthatderiveasignificantproportionofsalesviaexports,anappreciatingcurrencyisusuallybadnewsbecauseitmakestheindustrylesscompetitiveoverseas.Here,theappreciatingFrenchcurrencymakesFrenchimportsmoreexpensiveinEngland.

23.Determinantsofbuyerpowerincludebuyerconcentration,buyervolume,buyerinformation,availablesubstitutes,switchingcosts,brandidentity,andproductdifferences.Point1addressesavailablesubstitutes,Point2addressesbuyerinformation,andPoint4addressesbuyervolumeandbuyerconcentration.Point3,whichaddressesthenumberofcompetitorsintheindustry,andPoint5,newentrants,maybefactualstatementsbutdonotsupporttheconclusionthatconsumershavestrongbargainingpower.

24.a.Productdifferentiationcanbebasedontheproductitself,themethodofdelivery,orthemarketingapproach.

25.Afirmwithastrategicplanningprocessnotguidedbyitsgenericcompetitivestrategyusuallymakesoneormoreofthefollowingmistakes:

1.Thestrategicplanisalistofunrelatedactionitemsthatdonotleadtoasustainablecompetitiveadvantage.

2.Priceandcostforecastsarebasedoncurrentmarketconditionsandfailtotakeintoaccounthowindustrystructurewillinfluencefuturelong-termindustryprofitability.

3.Businessunitsareplacedintocategoriessuchasbuild,hold,andharvest;withbusinessesfailingtorealizethatthesearenotbusinessstrategies,butratherthemeanstoachievethestrategy.

4.Thefirmfocusesonmarketshareasameasureofcompetitiveposition,failingtorealizethatmarketshareistheresultandnotthecauseofasustainablecompetitiveposition.

Smith’sobservations2and3describetwoofthesemistakesandthereforedonotsupporttheconclusionthattheNorthWinery’sstrategicplanningprocessisguidedandinformedbytheirgenericcompetitivestrategy.

CFAPROBLEMS

1.a.Loweringreserverequirementswouldallowbankstolendoutahigherfractionofdepositsandthusincreasethemoneysupply.

b.TheFedwouldbuyTreasurysecurities,therebyincreasingthemoneysupply.

c.Thediscountratewouldbereduced,allowingbankstoborrowadditionalfundsatalowerrate.

2.a.