Stock and Industry
Chapter 6 Industry Analysis
True/False Questions
T
F
1. The first step in the top-down approach to stock valuation is analyzing the position of the industry in its life cycle.
Answer: False
T
F
T
F
T
F
T
F
T
F 6. Industry life cycles measure the growth path of an industry through five stages.
Answer: True
T
F 7. Industry life cycles predict an industry's sensitivity to the economy.
Answer: False
T
F
2. The method of starting the stock valuation process with an analysis of the economy is referred to as the "bottom-up" approach.
Answer: False
3. The method that starts the stock valuation process with an economic analysis is called the "top-down" approach.
Answer: True
4. Investors who follow the bottom-up approach to stock valuation are referred to as
"industry-analysts".
Answer: False
5. The last step to the top-down approach is to analyze the overall health of the economy. Answer: False
8. The life cycle curve in Chapter 6 is graphed so that the steeper the slope of the line the faster the growth rate of the industry.
Answer: True
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T
F
9. The more saturated an industry gets with competitors, the further along the life cycle it will probably be.
Answer: True
T
F 10. Firms in the development stage are typically publicly owned.
Answer: False
T
F 11. Firms in the development stage finance their growth from internal cash flows.
Answer: False
T
F 12. A frequent source of capital for profitable Stage I companies is venture capitalists.
Answer: True
T
F 13. Due to intense needs for capital to fund growth, Stage I companies rarely pay cash dividends. Answer: True
T
F 14. Stock dividends are used to signal to investors that a company is not making any profits to distribute.
Answer: True
T
F 15. The presence of cash dividends increases the ability of some institutional investors to invest in companies.
Answer: True
T
F 16. The
True/False Questions
T
F
1. The first step in the top-down approach to stock valuation is analyzing the position of the industry in its life cycle.
Answer: False
T
F
T
F
T
F
T
F
T
F 6. Industry life cycles measure the growth path of an industry through five stages.
Answer: True
T
F 7. Industry life cycles predict an industry's sensitivity to the economy.
Answer: False
T
F
2. The method of starting the stock valuation process with an analysis of the economy is referred to as the "bottom-up" approach.
Answer: False
3. The method that starts the stock valuation process with an economic analysis is called the "top-down" approach.
Answer: True
4. Investors who follow the bottom-up approach to stock valuation are referred to as
"industry-analysts".
Answer: False
5. The last step to the top-down approach is to analyze the overall health of the economy. Answer: False
8. The life cycle curve in Chapter 6 is graphed so that the steeper the slope of the line the faster the growth rate of the industry.
Answer: True
77
T
F
9. The more saturated an industry gets with competitors, the further along the life cycle it will probably be.
Answer: True
T
F 10. Firms in the development stage are typically publicly owned.
Answer: False
T
F 11. Firms in the development stage finance their growth from internal cash flows.
Answer: False
T
F 12. A frequent source of capital for profitable Stage I companies is venture capitalists.
Answer: True
T
F 13. Due to intense needs for capital to fund growth, Stage I companies rarely pay cash dividends. Answer: True
T
F 14. Stock dividends are used to signal to investors that a company is not making any profits to distribute.
Answer: True
T
F 15. The presence of cash dividends increases the ability of some institutional investors to invest in companies.
Answer: True
T
F 16. The