Answer: a stock should be purchased if it is selling near its historic low price to book ratio Question 5 0.33333 out of 0.33333 points According to the efficient market hypothesis‚ purchasing high P/E stock should not produce superior investment results. Selected Answer: True Question 6 0.33333 out of 0.33333 points According to the dividend-growth model‚ the valuation of common stock depends on 1. the firm’s dividends 2. investors’ required rate of return 3. the prior
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should you do if you don’t want to spend a lot of time managing your investments?||A.||Get out of the game. Successful investing requires time and attention. If you don’t have the time to devote to it‚ you shouldn’t do it. ||B.||Invest in last year’s best-performing mutual fund.||C.||Invest in an index fund or ETF that tracks the entire stock market. ||D.||Invest in bond funds and other stable-value funds.|||3) When choosing a financial advisor‚ you should look for one who is interested in meeting with||A
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Chapter 09 Behavioral Finance and Technical Analysis Multiple Choice Questions 1. Testing many different trading rules until you find one that would have worked in the past is called _______. A. data mining B. perceived patterning C. pattern searching D. behavioral analysis 2. Models of financial markets that emphasize psychological factors affecting investor behavior are called _______. A. data mining B. fundamental analysis C. charting D. behavioral finance
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Prepare a critical evaluation of three basic methods of evaluating an investment (IRR‚ Payback and NPV). There are several basic methods of evaluating an investments that are commonly used by decision makers in both private corporations and public agencies. Each of these measures is intended to be an indicator of profit or net benefit for a project under consideration. Some of these measures indicate the size of the profit at a specific point in time; others give the rate of return per period when
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BFA 103 ACCOUNTING & FINANCIAL DECISION MAKING Semester 1‚ 2013 School of Accounting & Corporate Governance Faculty of Business Case Study Assignment By Tutor : Word count : 732 words Submission date : 14th April 2013 In this 21st era‚ mining sector had lead to rapid economics growth and improvement of social welfare in Australia (Kate Penney‚ et al.‚ 2012). As can be seen‚ between 2010 and 2011 roughly 85 percent out of the total commodities export in Australia was
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for matching these. It also introduces the concept that investing in IT infrastructure and keeping it current is an important component of being able to deliver value. This case speaks directly to the disconnect between IT budgeting practices and financial and business strategy implementation. The case describes how lack of clearly defined expectations‚ effective governance‚ and accountabilities can undermine the business-IT relationship and lead to a lack of trust. The case illustrates the need to
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share. During the year you received dividend income distributions of $1.50 per share and capital gains distributions of $2.85 per share. At the end of the year the shares had a net asset value of $23 per share. What was your rate of return on this investment? A) 30.24% B) 25.37% C) 27.19% D) 22.44% E) 29.18% Answer: A Difficulty: Moderate Rationale: R = ($23-21+1.5+2.85)/$21 = 30.238% 31. Assume that you purchased shares of High Flying mutual fund at a net asset value of $12.50 per share. During the
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**What is NPV?** a) If the value of NPV is greater than 0‚ then the project is a go! In other words‚ it’s profitable and worth the risk. b) If the value of NPV is less than 0‚ then the project isn’t worth the risk and is a no-go. So NPV takes risk and reward into consideration‚ which is why we use it in the world of corporate finance and capital budgeting. **Example** In order for us to calculate NPV‚ let’s use the following example. Suppose we’d like to make 10% profit on a 3
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QUANTITATIVE INVESTMENT ANALYSIS WORKBOOK Second Edition Richard A. DeFusco‚ CFA Dennis W. McLeavey‚ CFA Jerald E. Pinto‚ CFA David E. Runkle‚ CFA John Wiley & Sons‚ Inc. QUANTITATIVE INVESTMENT ANALYSIS WORKBOOK CFA Institute is the premier association for investment professionals around the world‚ with over 85‚000 members in 129 countries. Since 1963 the organization has developed and administered the renowned Chartered Financial Analyst Program. With a rich history of leading
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Compute the before-tax NPV of the new lift and advise the managers of Deer Valley about whether adding the lift will be a profitable investment. Show calculations to support your answer. 2. Assume that the after-tax required rate of return for Deer Valley is 8%‚ the income tax rate is 40%‚ and the MACRS recovery period is 10 years. Compute the after-tax NPV of the new lift and advise the managers of Deer Valley about whether adding the lift will be a profitable investment. Show calculations to
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