Q.1. What behavior finance bias means that investors are too slow in updating their beliefs to new evidence?
Ans. Conservatism finance bias means that investors are too slow to update their beliefs to new evidence.
Q.2. In shipping, which is usually higher, earning per share or cash earnings per share? Why?
Ans. in shipping cash earnings per share is ordinarily high as it provides a complete overview of the business and smooth comparison with other companies related to shipping.
Q.3. What monetary institution is all-powerful, completely unregulated, and spawned out of Basel Switzerland?
Ans. the bank of international settlements is a monetary institution that is most powerful unregulated and spawned out of Basel Switzerland.
Q.4. If I calculate a stock's intrinsic value today to be $4.50 and currently quoted at $7.17/share, should I buy or sell it today?
Ans. I will buy the stock because its intrinsic value is low, and its quoted price is high, which gives me profit in the future.
Q.5. If you were a U.S. Manufacturing company with production in China and sales primarily in the U.S., then what would you want the U.S. dollar to weaker or strengthen relative to the Chinese Yuan?
Ans. the U.S. dollar must be going strong compared to Yuan because it is its primary currency and should be healthy while doing business in any other country.
Q.6. Using the dividend discount model, assuming dividends in the next three periods are .10, .15, and .20 and will grow at 7%. Your required return is 12%; find intrinsic value today?
Ans. Growth= 7%
Po= D/r-g= 0.10/0.12-0.07=2
Q.7. If the company's stock price in the above question is Po=$1.72, should you buy or sell it?
As the dividend is also going to increase every year, we should buy the stock price and face profits in the upcoming years.
Q.8. Who represents the ownership is a corporation entitled to dividend/profit?
Ans. Shareholders represent the ownership of a corporation related to dividend/profit.
Q.9. Buying a mutual fund or ETF is what kind of management?
Ans. in asset management, management of the company, or investors buy mutual funds or ETF.
Q.10. What does LIBOR stand for?
Ans. LIBOR stands for London interbank offered rate .it is an interest rate at which banks offer funds to others in the international interbank market.
Q.11. If you are buying security, would you pay the bid or ask price?
Ans. If you are buying security, you have to pay big for security.
Q.12. What is the differentiation between mutual funds and an index fund (ETF) from a tax perspective? Which one is more powerful concerning taxes?
Ans. Exchange-traded funds are more tax-efficient as compare to mutual funds. It creates less taxable events against mutual funds. That makes the ETF more efficient for the tax section. ETF tries to present the precise performance of specialized, nontraditional indexes or is constructed using portfolio selections.
Q.13. Buying a call option offers you the correct option to buy or sell the investment?
Ans. Buying a call option giving you the right to sell the investment.
Q.14. Does using margin increase or decrease risk?
Ans. the margin increases the risk factor, but it also increases the profit ratio.
Q.15. I used the Navios Maritime preferred share buyback to show what in regards to the efficient Hypothesis and whether markets are or aren’t efficient?
Ans. Navios Maritime preferred share buyback is considered a helping tool, and it makes an efficient hypothesis and makes the market more efficient by providing plenty of options.
Q.16. What version of the EMH states that stock prices reflect all firm information, including company insiders? Strong, semi-strong, weak, minuscule, tiny, giant, or semi-weak.
Ans. A healthy version of the EMH states that stock prices reflect all firm information, including company insiders.
Q.17. The Tulip, South Sea shipping company, and Dot com bust represent?
Ans. the tulip, South Seas, and dot coms involved in such sectors belong to profits destined to be squeezed by cut-throat competition. The reality will start up with the hundreds of dollars change hands at the height of the speculative fever that is virtually worthless.
Q.18. If you love leveraging risks/returns, when should you attempt to maximize leverage in the industry cycle? At the top or bottom?
To maximize the industry's leverage, we should increase the leverage in the industry cycle at the top of the industry.
Q.19. If the dividend drops and the stock stays where it is, what happens to the yield? Higher or lower?
Ans. the dividend and stock show no effect on the yield, and any drop or rise in the dividend shows no effect.
Q.20. A stock sells for $40 and has a liquidation value of $200. Should you go long or short?
Ans. It goes long term if its liquidation value is going to be a significant increase in the price.
Q.21. This Formula: RF+B (Rm-Rf) =k represents what model?
Ans. The capital asset pricing model is to use this formula.
Q.22. If Rm is 5%, Rf is 2%, and B is 1.3, use CAPM to solve fork?
Ans. k= RF+B (Rm-Rf)
Q.23. in the discount model, if k increases while all other variables remain constant, what can we get about VO?
Ans. If k going to increase, then the Vo will also increase in discounting models if all the reaming factors will be the same.
Q. 48. What is the problem in general with using earnings or EPS in analyzing companies?
The higher EPS ratio defines that the company is earning more profit in the market; therefore, they pay a higher dividend.
Q.49. The current dividend is $4.27. It is expected to grow continuously at 7%. Let k =11% what is the value today?
Q.50. The dividend yield is 4%, and the expected capital gains yield is 5,678%. What’s the total expected return?
Q.52. What must be valid for reinvestment to make sense? ROE >k or ROE<k?
Q.53. for DDM’s to work, k<g or g>k or g=k
Q.54. If earnings are $9 million, the company has 1 million shares outstanding and retains 40%; what the payout per share (aka dividend per share)?
Q. 56. If I read that the APR is 6% and interest is compounded monthly, what the?
Q. 59. How do p/e ratios apply to the shipping industry, if at all?
The P/E ratios are applied for risk and danger.
Q.61. If the current ratio is decreasing, should you be happy or sad as a stakeholder?
If the current ratio of the firm is decreasing, then the stakeholder should be happy to work.
Q. 65 what financial statements reconcile non-cash charges?
The financial statements reconcile the non-cash charges and charge other goods like gold.
Q. 66 what financial statement portrays profitability?
The financial statement portrays the profitability and contract can be made less lose for profitability.
Q. 67. What statement shows what you own?
The profitability statement shows what one owns.
Q. 68 EBIT/Total assists in equal return on quantity.
Q. 69. The formula for ROE is?
Q. 73. If unemployment skyrockets, what happens to the wages in the near term?
If unemployment skyrockets, the wages in the near term increases.
Q. 76. I’m a Wall Street analyst covering UNO, LLC, a publically traded institution. Using assumptions to try and get several competing analysts are getting because I don’t want to think for myself or risk my job. I calculate a liquidation value of $3/share, the replacement cost of $5/share and give a 50% weighting to each of these scenarios based on some probability I pulled from thin air to get a somewhat rational number the company wants me to get and so the company uses my investment banking division someday to raise capital, so we generate huge fees as an investment bank… using the variables above and applying weighted scenario analysis what do I say the stock is worth?
The rating is assigned to the stock, the number competing for analysis finds the probability cost of $5/share
The weighting assigned to the agencies are mainly based on the issuer’s creditworthiness and can be interpreted directly as default. The other issues can be default probability, credit stability, and priority of payment.
Q. 78. Suppose you borrow $10,000 and take $5,000 out of your savings to buy $15,000 worth. After 1 year, the stock has doubled; how much are you up in $ as of now, assuming you pay off the ignoring interest or tax consequence?
Suppose borrowing costs were 7%; you're taxed at 22% on gains, and the interest is your capital gains tax rate. How much cash did you put in the bank?