FINANCE Investment Analysis and Portfolio Managem

FINANCE  Investment Analysis and Portfolio Management CHAPTER 13 QUESTIONS &  PROBLEM
 1   Briefly   describe   the   results   of   studies   that   examined   the   performance   of   alternative   industries   during   specific   time   periods   and   discuss   their   implications   for   industry   analysis.  


    2.     Briefly describe the results of the studies that examined industry performance over time.   Do these results complicate or simplify industry a analysis?  


3.     Assume all the firms in a particular industry have consistently experienced similar rates   of return. Discuss what this implies regarding the importance of industry and company   analysis for this industry.   


  4.   Discuss   the   contention   that   differences   in   the   performance   of   various   films   within   an   industry limit the usefulness of industry analysis. 


 5.     Several studies have examined the difference in risk for alternative industries during a   specified time period. Describe the results of these studies and discuss their implications   for industry analysis. 


6.     What were the results when industry risk was examined during successive time periods?   Discuss the implication of these results for industry analysis.  


     7.     Assume the industry you are analyzing is in the fourth stage of the industrial life cycle.   How would you react if your industry-economic analysis predicted that sales per share   for this industry would increase by 20 percent? Discuss your reasoning. 


     7.     Assume the industry you are analyzing is in the fourth stage of the industrial life cycle.   How would you react if your industry-economic analysis predicted that sales per share   for this industry would increase by 20 percent? Discuss your reasoning. 


8.     Discuss at what stage in the industrial life cycle you would like to discover an industry.   Justify your decision. 


  9.     Give   an   example   of   an   industry   in   Stage   2   of   the   industrial   life   cycle.   Discuss   your   reasoning for putting the industry in Stage 2 and any evidence that caused you to select   this stage for the industry. 


10.     Discuss   an example   of   input-output   analysis   to   predict   the   sales   for   the   auto   industry.   Discuss how you would use input-output analysis to predict the costs of production for   the auto industry.



 11.     Discuss   the   impact   of   the   threat   of   substitute   products   on   the   steel   industry's   profitability  



12.     Discuss   the   two   variables   that   must   be   considered   whether   you   are   using   the   present   value of cash flow approach or the relative valuation ratio approach to valuation. Why   are these variables relevant for either valuation approach? 


13.     List   the   three   variables   that   are   relevant   when   attempting   to   determine   whether   the   earnings multiple (P/E ratio) for an industry should be higher, equal to, or lower than   the market multiple. 


   14.     Discuss when you would use the two-stage growth FCFE model rather than the constant   growth model. 


15.     You are examining the P/EF ratio for an industry compared to the market and find that   the   industry   ratio   has   always   been   at   a   discount   to   the   market--for   example,   the   industry-market ratio of ratios is about 0.80.Discuss the variable(s) you would examine   to explain this difference or to justify an increase in the industry-market ratio. 



  PROBLEMS

   9 You know the following about your industry(I) and the market(M)  ：     ROE  I  : 12  ％     RR  I  ：  0.60   Beta  I  : 1.05   ROE  M  ：  16  ％     RR  M  : 0.55   Beta  M  : 1.00   Discuss   what   difference   you   would   expect   in   the   P/Es,   and   explain   why   you   expect   this   difference.