The S&P 500 Index is one of the most commonly used benchmark indices for the U.S. equity markets. Consisting of 500 companies, it is a market value-weighted index. This means that each company's performance is reflected in the index, weighted by the ratio of the company's value to the total value of all the companies. Based on your understanding of P/E ratios, in which of the following situations would the average trailing P/E ratio (current price divided by earnings per share over the previous 12 months) of the S&P 500 Index be higher? O The outlook for the economy and the markets is for an improvement. The outlook for the economy and the markets is for a downturn. You invest $100,000 in only one stock. To which kind of risk will you primarily be exposed? O Portfolio risk O Stand-alone risk Generally, investors would prefer to invest in assets that have: A high level of risk and low expected returns. A low level of risk and high expected returns.

The S&P 500 Index is one of the most commonly used benchmark indices for the U.S. equity markets. Consisting of 500 companies, it is a market value-weighted index. This means that each company's performance is reflected in the index, weighted by the ratio of the company's value to the total value of all the companies. Based on your understanding of P/E ratios, in which of the following situations would the average trailing P/E ratio (current price divided by earnings per share over the previous 12 months) of the S&P 500 Index be higher? O The outlook for the economy and the markets is for an improvement. The outlook for the economy and the markets is for a downturn. You invest $100,000 in only one stock. To which kind of risk will you primarily be exposed? O Portfolio risk O Stand-alone risk Generally, investors would prefer to invest in assets that have: A high level of risk and low expected returns. A low level of risk and high expected returns.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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In addition to price-weighted and value-weighted indexes, an equally weighted index is one in which the index value is computed from the average rate of return of the stocks comprising the index. Equally weighted indexes are frequently used by financial researchers to measure portfolio performance. The following three defense stocks are to be combined into a stock index in January 2010 (perhaps a portfolio manager believes these stocks are an appropriate benchmark for his or her performance): Price Shares (millions) 1/1/10 1/1/11 1/1/12 Douglas 360 $65 $69 $ 83 McDonnell Dynamics 450 52 46 60 General International Rockwell 170 81 70 86 a. Compute the rate of return on an equally weighted index of the three defense stocks for the year ending December 31, 2010. (Negative amounts should be indicated by a minus sign. Round your answer to 2 decimal places. Omit the "%" sign in your response.) Index return % b. If the index value is set to 100 on January 1, 2010, what will the index value be…
The following is a list of P/E ratios (current stock price divided by company's earnings per share) for 16 companies. 57, 53, 50, 46, 42, 35, 41, 41, 41, 37, 37, 34, 34, 34, 30, 30 Send data to calculator Draw the histogram for these data using an initial class boundary of 29.5, an ending class boundary of 59.5, and 5 classes of equal width. Note that you can add or remove classes from the figure. Label each class with its endpoints. Frequency 6 5+ 4+ 3+ 1 P/E ratio
Using the information in the table below, 1.Calculate the Price Earnings Ratio for both stocks. Share Price Per Share Stock X ($) 25 Earnings Per Share 2.00 Stock Y ($) 20 0.67 2. Interpret the results obtained in part above, by highlighting the implications for a firm of having a low P/E or a high P/E.
On a particular day, there were 3300 stocks that advanced on the NYSE and 1200 that declined. The volume in advancing issues was 500000000 and the volume in declining issues was 200100000. The common measure of market breadth is __________.
(Market value analysis) Lei Materials' balance sheet lists total assets of $1.35 billion, $196 million in current liabilities, $421 million in long-term debt, $733 million in common equity, and 52 million shares of common stock. If Lei's current stock price is $50.89, what is the firm's market-to-book ratio? The market-to-book ratio is (Round to two decimal places.)
3. Industry A consists of four firms, each of which has an equal share of the market. a. Compute the Herfindahl-Hirschman index for the industry. b. Industry B consists of 10 firms, each of which has an equal share of the market. Compare the Herfindahl-Hirschman Indexes for the two industries. c. Now suppose that there are 100 firms in the industry, each with equal shares. What is the Herfindahl-Hirschman index for this industry? d. State the general relationship between the competitiveness of an industry and its Herfind- ahl-Hirschman index.
(Market value analysis) Lei Materials' balance sheet lists total assets of $1.17 billion, $197 million in current liabilities, $435 million in long-term debt, $538 million in common equity, and 50 million shares of common stock. If Lei's current stock price is $54.48, what is the firm's market-to-book ratio? The market-to-book ratio is (Round to two decimal places.)
What is the answer for these? and how do we find them k. Return on common stockholders' equity % %l. Price-earnings ratio, assuming that the market price was $72.12 per share on May 29, 2018, and $53.06 per share on May 30, 2017.
Computing earnings per share, price/earnings ratio, and rate of return on common stockholders’ equity Gullo Company reported these figures for 2018 and 2017: Requirements Compute Gullo Company’s earnings per share for 2018. Assume the company paid the minimum preferred dividend during 2018. Round to the nearest cent. Compute Gullo Company’s price/earnings ratio for 2018. Assume the company’s market price per share of common stock is $9. Round to two decimals. Compute Gullo Company’s rate of return on common stockholders’ equity for 2018. Assume the company paid the minimum preferred dividend during 2018. Round to the nearest whole percent.
The Standard and Poor's 500 is an index that include 500 of the best US companies and is based on the price of the stocks of said companies. Select one: True False
Calculation of which if the following metrics require knowledge of the company’s share price? Choose two A) return on equity B) dividend yield C) dividend payout ratio D) ratio of market-to-book value E) leverage ratio
If we know that a firm has a net profit margin of 4.3 %, total asset turnover of 0.77, and a financial leverage multiplier of 1.36, what is its ROE? What is the advantage to using the DuPont system to calculate ROE over the direct calculation of earnings available for common stockholders divided by common stock equity?

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