A luxury cell phone maker has a high fixed-cost base and a lot of debt. Which stakeholder in the company would you rather be? - ✅A shareholder in a booming economy A rise in which of the following inputs will increase an absolute valuation? - ✅Earnings estimate Assume that an investor in the S&P 500 reinvests his dividends. According to the chart, what approximate return would this investor have reaped from the early 2009 trough to the endpoint of the chart? - ✅340% At its peak at the end of 1999, Microsoft had a market cap of $600B. PC sales were booming and most PCs ran on Microsoft software. Revenue was growing 30% per year. The P/E ratio peaked at nearly 80.0x in 1999. Looking at this chart, what happened in the subsequent 15 years? - ✅The decline in the P/E ratio more than offset earnings growth and this pushed the market cap down Below is a table for the steel producers Dashboard, which shows the sources of demand for steel products globally. Given the data, which of the following would be of most interest to prospective investors in steel? - ✅The impact of China's recession on the commercial real estate market Company A pays a dividend of 2%. Company B's stock price increases by 1% plus the inflation rate every year. Company C pays 3% dividends, and its stock price decreases every year by 2%. Company D pays 0% dividends, and its stock price does not increase year over year. If the companies are otherwise identical, which would you invest in? - ✅Company B Company X was expected to have earnings per share of $0.52 for the upcoming quarter. On the day of the results, the company reported earnings per share of $0.83. What happened to the share price when the stock market opened? - ✅There is not enough information to tell Corporate bond issuers go bankrupt more frequently than governments, as they do not have a tax base to fall back on in hard times - ✅Why did the corporate spread significantly widen during the 2008 market crash? Engines are the most expensive, heavy component on an aircraft and are designed with detailed specifications. Which of the following would likely be the best theme for a Rolls- Royce analyst research note to help a portfolio manager decide between investing in Rolls-Royce or United Technologies? - ✅A comparison of the commercial prospects of new aircraft models Here is a chart of the index value for the S&P 500 and the United Kingdom's main equity index, the FTSE 100, from the end of 2008 to early 2015. The labels have been removed. One index has clearly outperformed the other. Over this period, there was a technology boom and an oil crash. Here are pie charts showing the early 2015 index compositions by industry for both the S&P 500 and the FTSE 100. Which index outperformed? - ✅The S&P 500 Index Here is a chart of the Nasdaq Composite, the world's main technology index. It peaked in the dotcom bubble on March 10, 2000. The P/E.... - ✅Earnings grew substantially, meaning that the P/E ratio in early 2015 was only around 30.3x Here is a table from Bloomberg intelligence aluminum dashboard which shows the different end-users of aluminum in China. Which of the following Bloomberg headlines would be of most interest to an aluminum trader in China? - ✅China's Aluminum Demand Weathers Real-Estate Slowdown So Far Here is the capital structure of Microsoft. What part of the $117.67 share price (to the nearest dollar) is represented by cash? - ✅$17 Here is the WACC function for U.S. drug company Merck. The WACC calculation has been hidden. What is the WACC? - ✅8.1% How is enterprise value calculated? - ✅enterprise value = market cap-cash+debt If the earnings per share of a company is $3.85 and the earnings yield is 2.5%, what is the price per share? - ✅$154.00 In 1999, James Glassman and Kevin Hassett published a book called "Dow 36,000". At the time, the Dow Jones Industrial Average Index was just under 12,000. Which of the following is a potential substitute for the book title? - ✅The Sum of the Share Prices of All 30 Dow Jones Members Will Triple Look at the below yield curve inversion chart. What is most likely to happen as a result of the most recent yield curve inversion shown? - ✅GDP will dip Masco is a consumer discretionary company that focuses on home improvement products. Here is a breakdown of the revenue concentration by industry. Which of the following headlines would be of the most interest to potential investors? - ✅Kitchen and Bathroo