Question 1

Monetary policy is determined by

Accepted Answer

A)  government budget decisions. 
B)  presidential mandates. 
C)  the Board of Governors of the Federal Reserve System. 
D)  congressional actions. 
E)  None of the options are correct. 
A)  government budget decisions. 
B)  presidential mandates. 
C)  the Board of Governors of the Federal Reserve System. 
D)  congressional actions. 
E)  None of the options are correct.

Question 2

The industry with the highest ROE in 2018 was

Accepted Answer

A)  grocery and food. 
B)  trucking. 
C)  business software. 
D)  computer systems. 
E)  integrated oil and gas. 
A)  grocery and food. 
B)  trucking. 
C)  business software. 
D)  computer systems. 
E)  integrated oil and gas.

Question 3

The average duration of unemployment and changes in the consumer price index for services are

Accepted Answer

A)  leading economic indicators. 
B)  coincidental economic indicators. 
C)  lagging economic indicators. 
D)  composite economic indicators. 
A)  leading economic indicators. 
B)  coincidental economic indicators. 
C)  lagging economic indicators. 
D)  composite economic indicators.

Question 4

Assume the U.S. government was to decide to increase the budget field. Holding all else constant, this will cause ______ to increase.

Accepted Answer

A)  interest rates 
B)  government borrowing 
C)  unemployment 
D)  interest rates and government borrowing 
E)  None of the options are correct. 
A)  interest rates 
B)  government borrowing 
C)  unemployment 
D)  interest rates and government borrowing 
E)  None of the options are correct.

Question 5

Which of the following are examples of defensive industries?

Accepted Answer

A)  Food producers 
B)  Durable goods producers 
C)  Pharmaceutical firms 
D)  Public utilities 
E)  Food producers, pharmaceutical firms, and public utilities 
A)  Food producers 
B)  Durable goods producers 
C)  Pharmaceutical firms 
D)  Public utilities 
E)  Food producers, pharmaceutical firms, and public utilities

Question 6

If the economy were going into a recession, an attractive industry to invest in would be the

Accepted Answer

A)  automobile industry. 
B)  medical services industry. 
C)  construction industry. 
D)  automobile and construction industries. 
E)  medical services and construction industries. 
A)  automobile industry. 
B)  medical services industry. 
C)  construction industry. 
D)  automobile and construction industries. 
E)  medical services and construction industries.

Question 7

Assume the U.S. government was to decide to decrease the budget deficit. Holding all else constant, this will cause ______ to decrease.

Accepted Answer

A)  interest rates 
B)  government borrowing 
C)  unemployment 
D)  interest rates and government borrowing 
E)  None of the options are correct. 
A)  interest rates 
B)  government borrowing 
C)  unemployment 
D)  interest rates and government borrowing 
E)  None of the options are correct.

Question 8

Sector rotation

Accepted Answer

A)  should always be carried out. 
B)  is never worthwhile. 
C)  is shifting the portfolio more heavily toward an industry or sector that is expected to perform well in the future. 
D)  can be implemented without cost. 
A)  should always be carried out. 
B)  is never worthwhile. 
C)  is shifting the portfolio more heavily toward an industry or sector that is expected to perform well in the future. 
D)  can be implemented without cost.

Question 9

A peak is

Accepted Answer

A)  a transition from an expansion in the business cycle to the start of a contraction. 
B)  a transition from a contraction in the business cycle to the start of an expansion. 
C)  a depression that lasts more than three years. 
D)  only a feature of geography and not an investment term. 
E)  None of the options are correct. 
A)  a transition from an expansion in the business cycle to the start of a contraction. 
B)  a transition from a contraction in the business cycle to the start of an expansion. 
C)  a depression that lasts more than three years. 
D)  only a feature of geography and not an investment term. 
E)  None of the options are correct.

Question 10

If the economy is growing, firms with high operating leverage will experience

Accepted Answer

A)  higher increases in profits than firms with low operating leverage. 
B)  similar increases in profits as firms with low operating leverage. 
C)  smaller increases in profits than firms with low operating leverage. 
D)  no change in profits. 
E)  None of the options are correct. 
A)  higher increases in profits than firms with low operating leverage. 
B)  similar increases in profits as firms with low operating leverage. 
C)  smaller increases in profits than firms with low operating leverage. 
D)  no change in profits. 
E)  None of the options are correct.

Question 11

Industrial production refers to

Accepted Answer

A)  the amount of personal disposable income in the economy. 
B)  the difference between government spending and government revenues. 
C)  the total manufacturing output in the economy. 
D)  the total production of goods and services in the economy. 
A)  the amount of personal disposable income in the economy. 
B)  the difference between government spending and government revenues. 
C)  the total manufacturing output in the economy. 
D)  the total production of goods and services in the economy.

Question 12

GDP refers to

Accepted Answer

A)  the amount of personal disposable income in the economy. 
B)  the difference between government spending and government revenues. 
C)  the total manufacturing output in the economy. 
D)  the total production of goods and services in the economy. 
E)  None of the options are correct. 
A)  the amount of personal disposable income in the economy. 
B)  the difference between government spending and government revenues. 
C)  the total manufacturing output in the economy. 
D)  the total production of goods and services in the economy. 
E)  None of the options are correct.

Question 13

Two firms, A and B, both produce widgets. The price of widgets is $1 each. Firm A has total fixed costs of $500,000 and variable costs of 50¢ per widget. Firm B has total fixed costs of $240,000 and variable costs of 75¢ per widget. The corporate tax rate is 40%. If the economy is strong, each firm will sell 1,200,000 widgets. If the economy enters a recession, each firm will sell 1,100,000 widgets. Calculate firm B's degree of operating leverage.

Accepted Answer

A)  .714 
B)  9.09 
C)  7.86 
D)  7.14 
A)  .714 
B)  9.09 
C)  7.86 
D)  7.14

Question 14

Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers. If the economy enters a recession, the total cost of firm C will be

Accepted Answer

A)  $1,680,000. 
B)  $1,170,000. 
C)  $750,000. 
D)  $420,000. 
A)  $1,680,000. 
B)  $1,170,000. 
C)  $750,000. 
D)  $420,000.

Question 15

Classifying firms into groups, such as _________, provides an alternative to the industry life cycle.

Accepted Answer

A)  slow-growers 
B)  stalwarts 
C)  countercyclicals 
D)  slow-growers and stalwarts 
E)  slow-growers and countercyclicals 
A)  slow-growers 
B)  stalwarts 
C)  countercyclicals 
D)  slow-growers and stalwarts 
E)  slow-growers and countercyclicals

Question 16

Two firms, A and B, both produce widgets. The price of widgets is $1 each. Firm A has total fixed costs of $500,000 and variable costs of 50¢ per widget. Firm B has total fixed costs of $240,000 and variable costs of 75¢ per widget. The corporate tax rate is 40%. If the economy is strong, each firm will sell 1,200,000 widgets. If the economy enters a recession, each firm will sell 1,100,000 widgets. If the economy is strong, the after-tax profit of Firm B will be

Accepted Answer

A)  $0. 
B)  $6,000. 
C)  $36,000. 
D)  $60,000. 
A)  $0. 
B)  $6,000. 
C)  $36,000. 
D)  $60,000.

Question 17

The stock price index and new orders for nondefense capital goods are

Accepted Answer

A)  leading economic indicators. 
B)  coincidental economic indicators. 
C)  lagging economic indicators. 
D)  not useful as economic indicators. 
A)  leading economic indicators. 
B)  coincidental economic indicators. 
C)  lagging economic indicators. 
D)  not useful as economic indicators.

Question 18

According to Michael Porter, there are five determinants of competition. An example of _____ is when a buyer purchases a large fraction of an industry's output and can demand price concessions.

Accepted Answer

A)  threat of entry 
B)  rivalry between existing competitors 
C)  pressure from substitute products 
D)  bargaining power of buyers 
E)  bargaining power of suppliers 
A)  threat of entry 
B)  rivalry between existing competitors 
C)  pressure from substitute products 
D)  bargaining power of buyers 
E)  bargaining power of suppliers

Question 19

Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers. If the economy is strong, the total revenue of firm C will be

Accepted Answer

A)  $1,680,000. 
B)  $1,400,000. 
C)  $2,000,000. 
D)  $2,400,000. 
A)  $1,680,000. 
B)  $1,400,000. 
C)  $2,000,000. 
D)  $2,400,000.

Question 20

Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers. If the economy is strong, the before-tax profit of firm C will be

Accepted Answer

A)  $1,680,000. 
B)  $1,050,000. 
C)  $510,000. 
D)  $204,000. 
A)  $1,680,000. 
B)  $1,050,000. 
C)  $510,000. 
D)  $204,000.

Exam 17: Macroeconomic and Industry Analysis

Monetary policy is determined by

The industry with the highest ROE in 2018 was

The average duration of unemployment and changes in the consumer price index for services are

Assume the U.S. government was to decide to increase the budget field. Holding all else constant, this will cause ______ to increase.

Which of the following are examples of defensive industries?

If the economy were going into a recession, an attractive industry to invest in would be the

Assume the U.S. government was to decide to decrease the budget deficit. Holding all else constant, this will cause ______ to decrease.

Sector rotation

A peak is

If the economy is growing, firms with high operating leverage will experience

Industrial production refers to

GDP refers to

Classifying firms into groups, such as _________, provides an alternative to the industry life cycle.

The stock price index and new orders for nondefense capital goods are

According to Michael Porter, there are five determinants of competition. An example of _____ is when a buyer purchases a large fraction of an industry's output and can demand price concessions.

The Investment Environment

Asset Classes and Financial Instruments

How Securities Are Traded

Mutual Funds and Other Investment Companies

Risk, Return, and the Historical Record

Capital Allocation to Risky Assets

Efficient Diversification

Index Models

The Capital Asset Pricing Model

Arbitrage Pricing Theory and Multifactor Models of Risk and Return

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Empirical Evidence on Security Returns

Bond Prices and Yields

The Term Structure of Interest Rates

Managing Bond Portfolios

Equity Valuation Models

Financial Statement Analysis

Options Markets: Introduction

Option Valuation

Futures Markets

Futures, Swaps, and Risk Management

Portfolio Performance Evaluation

International Diversification

Hedge Funds

The Theory of Active Portfolio Management

Investment Policy and the Framework of the Cfa Institute

Filters