投资学10版习题答案17.docx

1、投资学10版习题答案17CHAPTER 17: MACROECONOMIC AND INDUSTRY ANALYSISPROBLEM SETS 1. Expansionary (looser) monetary policy to lower interest rates would stimulate both investment and expenditures on consumer durables. Expansionary fiscal policy (i.e., lower taxes, increased government spending, increased welf

2、are transfers) would stimulate aggregate demand directly.2. A depreciating dollar makes imported cars more expensive and American cars less expensive to foreign consumers. This should benefit the U.S. auto industry.3. This exercise is left to the student; answers will vary. Successful students will

3、likely discuss an industrys profitability, leverage, and growth opportunities, especially in relation to general macroeconomic conditions. 4. A top-down approach to security valuation begins with an analysis of the global and domestic economy. Analysts who follow a top-down approach then narrow thei

4、r attention to an industry or sector likely to perform well, given the expected performance of the broader economy. Finally, the analysis focuses on specific companies within an industry or sector that has been identified as likely to perform well. A bottom-up approach typically emphasizes fundament

5、al analysis of individual company stocks and is largely based on the belief that undervalued stocks will perform well regardless of the prospects for the industry or the broader economy. The major advantage of the top-down approach is that it provides a structured approach to incorporating the impac

6、t of economic and financial variables, at every level, into analysis of a companys stock. One would expect, for example, that prospects for a particular industry are highly dependent on broader economic variables. Similarly, the performance of an individual companys stock is likely to be greatly aff

7、ected by the prospects for the industry in which the company operates.5. Firms with greater sensitivity to business cycles are in industries that produce durable consumer goods or capital goods. Consumers of durable goods (e.g., automobiles, major appliances) are more likely to purchase these produc

8、ts during an economic expansion but can often postpone purchases during a recession. Business purchases of capital goods (e.g., purchases of manufacturing equipment by firms that produce their own products) decline during a recession because demand for the firms end products declines during a recess

9、ion.6. a. Gold Mining. Gold traditionally is viewed as a hedge against inflation. Expansionary monetary policy may lead to increased inflation and thus could enhance the value of gold mining stocks.b. Construction. Expansionary monetary policy will lead to lower interest rates which ought to stimula

10、te housing demand. The construction industry should benefit.7. Supply-side economists believe that a reduction in income tax rates will make workers more willing to work at current or even slightly lower (gross-of-tax) wages. Such an effect ought to mitigate cost pressures on the inflation rate.8. a

11、. When both fiscal and monetary policies are expansive, the yield curve is sharply upward sloping (i.e. short-term rates are lower than long-term rates) and the economy is likely to expand in the future.9. a. When wealth is redistributed through the governments tax policy, economic inefficiency is c

12、reated. Tax policies should promote economic growth as much as possible.10. a. The robotics process entails higher fixed costs and lower variable (labor) costs. Therefore, this firm will perform better in a boom and worse in a recession. For example, costs will rise less rapidly than revenue when sa

13、les volume expands during a boom.b. Because its profits are more sensitive to the business cycle, the robotics firm will have the higher beta.11. a. Housing construction (cyclical but interest-rate sensitive): (iii) Healthy expansionb. Health care (a noncyclical industry): (i) Deep recessionc. Gold

14、mining (counter-cyclical): (iv) Stagflationd. Steel production (cyclical industry): (ii) Superheated economy12. a. Oil well equipment: Relative decline (Environmental pressures, decline in easily developed new oil fields)b. Computer hardware: Consolidationc. Computer software: Consolidationd. Geneti

15、c engineering: Start-upe. Railroads: Relative decline13. a. General Autos. Pharmaceuticals are less of a discretionary purchase than automobiles.b. Friendly Airlines. Travel expenditure is more sensitive to the business cycle than movie consumption.14. The index of consumer expectations is a useful

16、leading economic indicator because, if consumers are optimistic about the future, they will be more willing to spend money, especially on consumer durables, which will increase aggregate demand and stimulate the economy.15. Labor cost per unit is a useful lagging indicator because wages typically st

17、art rising only well into an economic expansion. At the beginning of an expansion, there is considerable slack in the economy and output can expand without employers bidding up the price of inputs or the wages of employees. By the time wages start increasing due to high demand for labor, the boom pe

18、riod has already progressed considerably.16. The expiration of the patent means that General Weedkillers will soon face considerably greater competition from its competitors. We would expect prices and profit margins to fall and total industry sales to increase somewhat as prices decline. The indust

19、ry will probably enter the consolidation stage in which producers are forced to compete more extensively on the basis of price.17. a. Expected profit = Revenues Fixed costs Variable costs= $120,000 $30,000 (1/3) $120,000 = $50,000b. c. If sales are only $108,000, profit will fall to:$108,000 $30,000

20、 (1/3) $108,000 = $42,000This is a 16% decline from the forecasted value.d. The decrease in profit is 16% = DOL 10% drop in sales.e. Profit must drop more than 100% to turn negative. For profit to fall 100%, revenue must fall by:Therefore, revenue would be only 37.5% of the original forecast. At thi

21、s level, revenue will be: 0.375 $120,000 = $45,000f. If revenue is $45,000, profit will be:$45,000 $30,000 (1/3) $45,000 = $018. Equity prices are positively correlated with job creation or longer work weeks, as each new dollar earned means more will likely be spent. High confidence presages well fo

22、r spending and stock prices.19. a. Stock prices are one of the leading indicators. One possible explanation is that stock prices anticipate future interest rates, corporate earnings, and dividends. Another possible explanation is that stock prices react to changes in the other leading economic indic

23、ators, such as changes in the money supply or the spread between long-term and short-term interest rates. 20. a. Industrial production is a coincident indicator; the others are leading.21. b. If historical returns are used, the arithmetic and geometric means of returns are available. The geometric m

24、ean is preferred for multiperiod horizons to observe long-term trends. An alternative to the equity risk premium is to use a moving average of recent historical market returns. This will reveal a low expected equity risk premium when times have been bad, which is contrary to investor expectations. W

25、hen using historical data, there is a trade-off between long and short time spans. Short time spans are helpful to reduce the impact of regime changes. Long time spans provide better statistical data that are less sensitive. 22. a. Foreign exchange rates can significantly affect the competitiveness

26、and profitability for a given industry. For industries that derive a significant proportion of sales via exports, an appreciating currency is usually bad news because it makes the industry less competitive overseas. Here, the appreciating French currency makes French imports more expensive in Englan

27、d.23. Determinants of buyer power include buyer concentration, buyer volume, buyer information, available substitutes, switching costs, brand identity, and product differences. Point 1 addresses available substitutes, Point 2 addresses buyer information, and Point 4 addresses buyer volume and buyer

28、concentration. Point 3, which addresses the number of competitors in the industry, and Point 5, new entrants, may be factual statements but do not support the conclusion that consumers have strong bargaining power.24. a. Product differentiation can be based on the product itself, the method of deliv

29、ery, or the marketing approach.25. A firm with a strategic planning process not guided by its generic competitive strategy usually makes one or more of the following mistakes:1.The strategic plan is a list of unrelated action items that do not lead to a sustainable competitive advantage.2.Price and

30、cost forecasts are based on current market conditions and fail to take into account how industry structure will influence future long-term industry profitability.3.Business units are placed into categories such as build, hold, and harvest; with businesses failing to realize that these are not busine

31、ss strategies, but rather the means to achieve the strategy.4.The firm focuses on market share as a measure of competitive position, failing to realize that market share is the result and not the cause of a sustainable competitive position.Smiths observations 2 and 3 describe two of these mistakes a

32、nd therefore do not support the conclusion that the North Winerys strategic planning process is guided and informed by their generic competitive strategy.CFA PROBLEMS 1. a. Lowering reserve requirements would allow banks to lend out a higher fraction of deposits and thus increase the money supply.b. The Fed would buy Treasury securities, thereby increasing the money supply.c. The discount rate would be reduced, allowing banks to borrow additional funds at a lower rate.2. a.