茲維博迪金融學(xué)第二版試題庫7TB(1)

1、Chapter Seve nPrin ciples of Market Valuati onThis chapter contains 30 multiple choice questi on s, 10 short problems and 5 Ion ger problems.Multiple Choice1. In regard to an asset, theis defi ned as the process well-i nformed in vestors mustpay for it in a free and competitive market.(a) analyst va

2、lue(b) technical value(c) competitive value(d) fun dame ntal valueAn swer: (d)2. In corporate finance decisi on making, an extremely importa nt rule is to choose the in vestme nt thatcurrent shareholders wealth.(a) minimizes(b) maximizes(c) provides zero change in(d) jeopardizesAn swer: (b)3. In ass

3、et valuati on, the method used to accomplish the estimati on depe nds on the(a) number of participants(b) quality of calculating instruments(c) richness of the information set available(d) geographic locationAn swer: (c)4. The states that in a competitive market, if two assets are equivalent, they w

4、ill tendto have the same market price.(a) Law of Real Interest Rates(b) Law of One Price(c) Law of Price Equivalency(d) Law of FuturesAnswer: (b)5. The Law of One Price is enforced by a process called , the purchase and immediatesale of equivalent assets in order to earn a sure profit from a differe

5、nce in their prices.(a) swapping(b) maximization(c) arbitrage(d) speculationAnswer: (c)6. refers to the totality of costs such as shipping, handling, insuring, and broker fees.(a) Shipping costs(b) Transaction costs(c) Installation costs(d) Insurance costsAnswer: (b)7. The Law of One price is a stat

6、ement about the price of one asset the price ofanother.(a) absolute to(b) relative to(c) multiplied by(d) independent ofAnswer: (b)8. If an entity borrows at a lower rate and lends at a higher rate, this is an example of (a) opportunity arbitrage(b) interest-rate arbitrage(c) exchange arbitrage(d) n

7、ominal arbitrageAnswer: (b)9. If arbitrage ensures that any three currencies are freely convertible in competitive markets, then:(a) it is enough to know only one exchange rate to determine the third(b) we can estimate two exchange rates based on one exchange rate only(c) it is enough to know the ex

8、change rates between any two in order to determine the third(d) it is necessary to know all three ratesAnswer: (c)10. Suppose you have $15,000 in a bank account earning an interest rate of 4% per year. At the same time you have an unpaid balance on your credit card of $6,000 on which you are paying

9、an interest rate of 17% per year. What arbitrage opportunity do you face?(a) $240 per year(b) $600 per year(c) $780 per year(d) $1,020 per yearAnswer: (c)11. If the dollar price of Japanese Yen is $0.009594 per Japanese Yen and the dollar price of Chinese Yuan is $0.1433 per Chinese Yuan, what is th

10、e Japanese Yen price of a Chinese Yuan? (i.e., JPY/CNY)(a) 0.001375 JPY/CNY(b) 0.066950 JPY/CNY(c) 9.594 JPY/CNY(d) 14.936419 JPY/CNYAnswer: (d)12. If the dollar price of guilders is $0.5634 per Guilder and the dollar price of Euros is $1.5576 per Euro, what is the Euro price of the Guilder? (i.e.,

11、EUR/ANG)(a) 0.361700 EUR/ANG(b) 0.877552 EUR/ANG(c) 2.764643 EUR/ANG(d) 5.634 EUR/ANGAn swer: (d)13. Suppose the price of gold is 51.09 British pounds per ounce. If the dollar price of gold is $100 per ounce, what would you expect the dollar price of a British pound to be?(a) $1.95733 per GBP(b) $1.

12、5109 per GBP(c) $0.5109 per GBP(d) $0.4891 per GBPAn swer: (a)Questions 14-18 refer to the following exchange rate table. To answer 14-18 you will have to fill in the miss ing excha nge rates.U.S. Dollar (USD)Peso (MXN)Euro (EUR)Cdn Dlr (CAD)U.S. Dollarr$1Peso10.398Euro0.6420Cdn Dlr1.000314. What is

13、 the Euro/Peso exchange rate? (i.e., EUR/MXN)(a) 0.617426EUR/MXN(b) 0.641807 EUR/MXN(c) 6.675516 EUR/MXN(d) 16.196262 EUR/MXNAn swer: (a)15. What is the Cdn Dlr/Euro exchange rate? (i.e., CAD/EUR)(a) 0.641807 CAD/EUR(b) 1.558099 CAD/EUR(c) 6.420 CAD/EUR(d) 16.196262 CAD/EURAnswer: (b)16. What is the

14、 Euro/Cdn Dlr exchange rate? (i.e., EUR/CAD)(a) 0.3583 EUR/CAD(b) 0.641807 EUR/CAD(c) 1.558099 EUR/CAD(d) 10.394 EUR/CADAnswer: (b)17. What is the Peso/Cdn Dlr exchange rate? (i.e., MXN/CAD)(a) 0.096201 MXN/CAD(b) 0.641807 MXN/CAD(c) 10.394882 MXN/CAD(d) 16.196262 MXN/CADAnswer: (c)18. What is the P

15、eso/Euro exchange rate? (i.e., MXN/EUR)(a) 0.617426 MXN/EUR(b) 6.675516 MXN/EUR(c) 15.581112 MXN/EUR(d) 16.196262 MXN/EURAnswer: (d)19. You are travelling in FarOut where you can buy 130 kranes (a krane being the unit of currency of FarOut) with a U.S. dollar at official FarOut banks. Your tour guid

16、e has a relative who dabbles in the black market and this particular relative will sell you kranes for just $0.00833 each on the black market. How much will you lose or gain by exchanging $200 on the black market instead of going to the bank?(a) you would gain approximately 1,660 kranes(b) you would

17、 lose approximately 1,660 kranes(c) you would gain approximately 1,990 kranes(d) you would lose approximately 1,990 kranesAnswer: (d)20. In estimating the value of a share of a firm s stock, a simple model is to :(a) divide EPS by a P/E multiple(b) multiply EPS by a P/E multiple(c) multiply EPS by E

18、AT(d) divide EPS by market valueAnswer: (b)21. A firm s earnings per share are $6 and the industry average P/E multiple is 9. What would be an estimate of the value of a share of the firm s stock?(a) $54.00(b) $45.00(c) $1.50(d) $0.67sAnswer: (a)22. The value of the asset as it appears in the financ

19、ial statement is called the asset(a) market value(b) fixed value(c) book value(d) expected valueAnswer: (c)23. Consider the following stock market reaction to the information contained in a company sannouncement. A corporation has just announced that it must pursue the issuance of company equity. We

20、 could expect to see in the price of company stock.(a) a rise(b) a drop(c) a rapid rise(d) zero changeAnswer: (b)24. Consider what the stock market reaction to the following announcement would be. A corporation has just announced that it is engaging in a stock split of the company s shareWe could ex

21、pect to see a in the overall market capitalization rate and a in the price of company stock.(a) rise; drop(b) drop; rise(c) rise; drop(d) rise; dropAnswer: (a)25. The is the proposition that an asset s current price fully reflects all publiclys value.available information about future economic funda

22、mentals affecting the asset (a) public markets hypothesis(b) efficient markets exchange rates(c) fundamental value proposition(d) efficient markets hypothesisAnswer: (d)26. The market price of an asset reflects the of all analysts opinions with heavierweights on analysts who control large amounts of

23、 money and on those analysts who have better than average information.(a) best estimate(b) weighted average(c) highest estimate(d) lowest estimateAnswer: (b)27. Assume that the worldwide risk-free real rate of interest is 4% per year. Inflation in Denmark is 9% per year and in the United States it i

24、s 7% per year. Assuming there is no uncertainty about inflation, what are the implied nominal interest rates denominated in Danish krone and in U.S. dollars, respectively?(a) 16.63% (DKK); 13.50% (USD)(b) 13.50% (DKK); 16.63% (USD)(c) 13.36% (DKK); 11.28% (USD)(d) 11.28% (DKK); 13.36% (USD)Answer: (

25、c)28. The theory states that the expected real interest rate on risk-free loans is the sameall over the world.(a) nominal interest-rate parity(b) real interest-rate parity(c) efficient inflation rate parity(d) efficient market rateAnswer: (b)price of a29. states that exchange rates adjust so as to m

26、aintain the same“ real“ representative ” basket of goods and services around the world.(a) Purchasing power parity(b) Efficient markets hypothesis(c) Market valuation model(d) Exchange rate equityAnswer: (a)30. Assume that the worldwide risk-free real rate of interest is 5% per year. Inflation in Au

27、stralia is 9% per year and in Great Britain it is 12% per year. Assuming there is no uncertainty about inflation, what are the implied nominal interest rates denominated in Australian dollars and Great Britain pounds, respectively?(a) 22.08% (AUD), 11.45% (GBP)(b) 11.45% (AUD), 22.08% (GBP)(c) 17.60

28、% (AUD), 14.45% (GBP)(d) 14.45% (AUD), 17.60% (GBP)Answer: (d)Short Problems1. Suppose you have $20,000 in a bank acco unt earning an in terest rate of 4% per year. At the same time you have an unpaid balance on your credit card of $7,000 on which you are paying an interest rate of 18% per year. Wha

29、t is the arbitrage opportunity you face?Answer: You could take $7,000 out of your bank account and pay down your credit card bala nce. You would give up 4% per year in in terest earnings ($280) but you would save 18% per year in interest expenses ($1,260). So the arbitrage opportunity is worth $980

30、per year.2. Fill in the missing exchange rates in the following table:U.S. DollarEuroDanish KroneJapa nese YenU.S. Dollar$11.55760.20880.009594Euro0.6420Danish Krone4.7898Japa nese Yen104.23Answer:U.S. DollarEuroDanish KroneJapa nese YenU.S. Dollar$11.55760.20880.009594Euro0.64201 Euro0.13400.006159

31、Danish Krone4.78987.460741 Krone0.45954Japa nese Yen104.23162.3521.761Yen 13. You observe that the dollar price of the Mexica n peso is $0.09618 and the dollar price of the Can adia n dollar is $0.9997. What must the excha nge rate betwee n the Mexica n peso and the Can adia n dollar be for there to

32、 be no arbitrage opport uni ty?Answer:CAD/MXN = 0.096180.9997=0.096208 CAD/MXN4. Suppose that the exchange rate is $0.2970 to the Israeli shekel. How could you make arbitrage profits with $10,000 if the dollar price of gold is $200 per o un ce a nd the shekel price is 750 ILS per ounce?Answer: Take

33、$10,000 and buy 50 ounces of gold at $200 per ounce. Sell 50 ounces of gold in Israel for 37,500 ILS (750 ILS per ou nce). Take 37,500 ILS and excha nge it into dollars worth $11,137.50. The arbitrage profit is $1,137.50.5. You are travelling in FarOut where you can buy 150 kranes (a krane being the

34、 unit of currency in FarOut) with a U.S. dollar at official FarOut banks. Your tour guide has a relative who dabbles in the black market and this particular relative will sell you kranes for just $0.00685 each on the black market. How much would you gain or lose by excha nging $300 on the black mark

35、et in stead of going to the bank?Answer:On the official market: $300 x 150 kranes = 45,000 kranesOn the black market: $300 x 1/0.00685 kranes = 43,796 kranes Hence, you would lose 1,204 kran es.6. A firm searnings per share are $5.50 and the industry average P/E multiple is 8. What would be an estim

36、ate of the value of a share of the firm s stock? Is it possible for firms beingclassified in the same in dustry to have differe nt price/ear nings multiples?Answer:Estimated value share of stock = firm s EPS x Industry average P/E=$5.50 x 8=$44.00Firms classified as being in the same in dustry may h

37、ave differe nt opport un ities for growth in the future and may therefore differ in their P/E multiples.7. The P/E multiple of BHM Corporation is currently 5, while the P/E ratio of the S&P 500 is 10. What reas ons could acco unt for this differe nee?Answer:? BHM s reported earnings may be higher th

38、an they are expected to be in the future, or they may be in flated due to special acco unting methods used by BHM.? BHM may be riskier than the S&P 500 either because it is in a relatively risky in dustry or has a relatively higher debt ratio.8. The price of Hubris Co. stock rece ntly jumped whe n t

39、he CEO for the compa ny announced an in creased divide nd payme nt for the year. What might acco unt for such a market react ion?Answer: The market may believe the company s future prospects look very bright (that is, higher earnin gs, less risk, sound growth, etc.) and that the compa ny can susta i

40、n such an ear nings growth.9. Assume that the worldwide risk-free real rate of interest is 4% per year. Denmark has an expected rate of inflation of 9% per year and in Spain has an expected rate of inflation of 14% per year. Assuming there is no uncertainty about inflation, what are the implied nomi

41、nal in terest rates denomin ated in Kroner and Euros?Answer:Denmark: nominal interest rate = (1.04) x (1.09)=13.36% per yearSpain: nominal in terest rate=(1.04) x (1.14)=18.56% per year10. Assume that the worldwide risk-free real rate of interest is 4% per year. The United Kingdom has an expected ra

42、te of inflation of 8% per year and in Belgium it is 10% per year. Assuming there is no uncertainty about inflation, what are the implied nominal interest rates denomin ated in Pounds Sterl ing and Euros?Answer:United Kingdom: nominal interest rate = (1.04) x (1.08)=12.32% per yearBelgium: nominal in

43、 terest rate=(1.04) x (1.10)=14.40% per yearLon ger Problems1. Let s assume that you have operated your own bus in ess for 18 years. For the most recent fiscal year, sales were $15 milli on. Net In come for the most recent fiscal year was $1.5 milli on. The book value of your bus in ess was $11 mill

44、i on. Recen tly, a firm which is en gaged in similar activities to your own was sold and the following information was made public:Multiple of Book Value 0.8xMultiple of Net In come 11xMultiple of Sales0.7xa) How would you determine an appropriate range of value for your company?b) It has come to yo

45、ur attention that your company has future investment opportunities that would be less profitable than the competing company above. What does this say about the valuati on of your compa ny?Answer:a)MultipleofSales:0.7x = $15 million x 0.7 = $10.5 millionMultipleofNet In come:11x = $1.5 millio n x 11

46、= $16.5 millio nMultipleofBook Value:0.8x = $11 millio n x 0.8 = $8.8 millio nb) The valuati on of your compa ny would be at the lower end of the range.2. BHM stock is trading for $47 per share on the NYSE and $45 per share on the Sydney Stock Excha nge. Assume that the costs of buying and selli ng

47、BHM stock are n egligible.a) How can you make an arbitrage profit?b) Over time what would you expect to happen to stock prices in New York and Sydney?c) Now assume that the cost of buying and selli ng shares of BHM are 2% per tran sact ion. How does this affect your an swers?Answer: a) You could buy

48、 BHM stock in Sydney and simultaneously sell it in New York. Your arbitrage profit would be $2 per share.b) The prices would become equal.c) There could rema in a 2% discrepa ncy betwee n the prices which would be $1.84 in this in sta nee.3. Suppose you have $50,000 in a bank acco unt earning an in

49、terest rate of 3.5% per year. At the same time you have an unpaid balance on your credit card of $13,000 on which you are paying an interest rate of 21% per year. What is the arbitrage opportunity you face?Answer: You could take $13,000 out of your bank account and pay down your credit card balance.

50、 You would give up 3.5% per year in interest earnings ($455) but you would save 21% per year in in terest expe nses ($2,730). So the arbitrage opport unity is worth $2,275 per year.4. The quotes from Hubris Bank and Modesty Bank are give n below:Hubris Bank: 106 Yen/$Modesty Bank: 104 Yen/$An swer t

51、he follow ing questi ons based on these figures.a) If we assume no transaction costs, there is evidently an opportunity for arbitrage here. If an arbitrageur started with $10,000, exactly how would (s)he make profits andhow much profit would (s)he make?b) As many traders engage in arbitrage who do y

52、ou expect to see in the above quotes at these two ban ks?c) If there is a 1% tran sact ion cost for tran sact ions is there still an opport unity for arbitrage?Answer:Hubris Bank: 106 Yen/$Modesty Ba nk: 104 Yen/$a) At Hubris Bank, buy Yen with dollars (Ye n are cheaper).At Modesty Bank, buy dollars with Yen (dollars are cheaper).Start with $10,000:At