Modern growth theories are more optimistic than neoclassical growth theories because the former emphasise the unlimited potential of... a. Modern labour. O b. More informed government policy. O c. Knowledge-driven technological change. d. Modern capital. e. Economic theory.
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- Ceteris paribus, current financial market returns will increase as _____. Group of answer choices a. the uncertainty about the productivity of capital goods increases and people become more risk averse b. the uncertainty about the productivity of capital goods increases and people become less risk averse c. the uncertainty about the productivity of capital goods decreases and people become more risk averse d. the uncertainty about the productivity of capital goods decreases and people become less risk averseModigliani and Miller assumed that firms do not grow. How does positive growth change their conclusions about the value of the levered firm and its cost of capital?In the case of a perfect capital market, according to Modigliani and Miller Proposition I and II, what is the optimal capitalstructure? When you introduce taxes, how can leverage alter the incentives of managers?
- We learned that share value maximization is the ultimate goal of a firm in the market economy.How does this seemingly selfish goal benefit the entire society?hich of the following best describes the sustainable growth rate? The minimum growth rate that can be achieved without raising external funds The maximum growth rate that can be achieved without raising external funds The minimum growth rate that can be achieved while maintaining the firm's dividend policy The maximum growth rate that can be achieved while maintaining the firm's dividend policyExplain the concept of terminal growth rate and discuss why it is impossible for firms with good management to have a terminal growth rate higher than industry or market growth rate forever.
- Which of the following statements is false? A. Real assets generate net-income to the society. B. In most societies, resources are allocated not by an all-powerful dictator, but through the combined choices of millions of households and firms. C. Liabilities sacrifice future benefits. D. Leveraged buyouts (LBOs) are the most common type of commodity investment strategies.Suppose that as the economy moves through a business cycle, risk premiums also change. For example, in a recession, when people are concerned about their jobs, risk tolerance might be lower and risk premiums might be higher. In a booming economy, tolerance for risk might be higher and premiums lower.a. Would a predictably shifting risk premium such as described here be a violation of the efficient market hypothesis?b. How might a cycle of increasing and decreasing risk premiums create an appearance that stock prices “overreact,” first falling excessively and then seeming to recover?The steady state of the Solow Growth model occurs when the amount of physical capital reaches the point where replacing worn out capital amounts to all of the capital investment of a country. Group of answer choices True False
- 1. If the economy is expected to enter a period of strong growth, which of the following would be the best course of action? A. Purchase Utility Stocks B. Purchase Treasury Bills C. Purchase stocks D. Purchase bonds 2. Which of the following sector rotations would likely occur if it is forecast that economic conditions will decline? A. rotate from discretionary to staples B. rotate from defensives to cyclicals C. rotate from staples to discretionary D. rotate from utilities to tech 3. When a industry is entering a period of rapid expansion, what is generally true of the valuation /multiple of stocks in that industry? A. Multiples / Valuation will increase B. Sales will likely contract C. Multiples / Valuation will decrease D. None of the listed answers are correct 4. Economic indicators can help us formulate our opinion about macro factors, which can help direct our investment decisions. Which of the following is true about economic indicators right now?…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. A) If a firm takes steps that increase its expected future ROE, its stock price will increase. B) Based on your understanding of the uses and limitations of ROE, which of the following projects will a manager likely choose if his or her bonus is solely based on the ROE of the next project? Project Y, with 40% ROE and a small investment, generating low expected cash flows Project X, with 35% ROE and a large investment, generating high expected cash flows C) 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…Consider the following information regarding a new investment that a company intends to undertake:. State of the Economy Probability Market Return Investment Return Expansion 0.30 40% 60% Normal 0.50 10% 25% Recession 0.20 -15% -40% b). Compute the correlation between the market the investment return