【正文】 gains/ losses arise from translating changes in currency exchange rates versus the .dollar over the measuring period (three years in this case) into . dollars for the .pension plan. The Index mix lost % to the dollar, reducing what would otherwisehave been a very favorable return from the various country markets of % to a netreturn of only %.1Assume that each of the following changes is independent (., except for this change, all other factorsremain unchanged). In each case, indicate what will happen to the earnings multiplier andexplain why.a. The return on equity increases.b. The aggregate debt–equity ratio declines.c. Overall productivity of capital increases.d. The dividendpayout ratio declines.答案7(a). An increase in the ROE with no other changes should cause an increase in the multiplebecause it would imply a higher growth rate. An important question is, how was theincrease in ROE acplished? If it was due to operating factors (higher asset turnoveror profit margin) it is positive. If it was due to an increase in financial leverage, therecould be some offset due to an increase in the required rate of return (k).7(b). Increase, because this will increase earnings growth by raising equity turnover. It couldalso cause a decrease because it will increase the financial risk and, thus, the required k.7(c). Decrease, because this will increase growth and therefore raise the real RFR. It could alsoreduce inflation, which would decrease the nominal RFR, causing the multiplier to rise.7(d). Increase, because a decrease in the dividend payout rate increases the retention rate,raising the growth rate. It could also cause a decrease because it reduces the next period39。sdividends.1A . pension plan hired two offshore firms to manage the . equity portion of its total portfolio.Each firm was free to own stocks in any country included in Capital International’s Europe,Australia, and Far East Index (EAFE) and to use any form of dollar and/or nondollar cash or bondsas an equity substitute or reserve. After three years had elapsed, the records of the managers and theEAFE Index were as shown:表3You are a member of the plan sponsor’s pension mittee, which will soon meet with the plan’sconsultant to review manager performance. In preparation for this meeting, you go through the followinganalysis:a. Briefly describe the strengths and weaknesses of each manager, relative to the EAFE Index data.(5 minutes)b. Briefly explain the meaning of the data in the “Currency” column. (5 minutes)答案3(a). Overall, both managers added value by mitigating the currency effects present in theIndex. Both exhibited an ability to “pick stocks” in the markets they chose to be in(Manager B in particular). Manager B used his opportunities not to be in stocks quiteeffectively (via the cash/bond contribution to return), but neither of them matched thepassive index in picking the country markets in which to be invested (Manger B, inparticular).MANAGER A MANAGER BSTRENGTHS Currency Management Currency ManagementStock SelectionUse of Cash/Bond FlexibilityWEAKNESSES Country Selection Country Selection(to a limited degree)3(b). The column reveals the effect on performance in local currency terms after adjustment formovements in the . dollar and, therefore, the effect on the portfolio. Currencygains/losses arise from translating changes in currency exchange rates versus the .dollar over the measuring period (3 years in this case) into . dollars for the .pension plan. The Index mix lost % to the dollar, reducing what would otherwisehave been a very favorable return from the various country markets of % to a netreturn of only %.1Assume the industry you are analyzing is in the fourth stage of the industrial life cycle. How wouldyou react if your industryeconomic analysis predicted that sales per share for this industry wouldincrease by 20 percent? Discuss your reasoning.答案The fourth stage of the industrial life cycle is stabilization and market maturity. Duringthis stage, sales grow in line with the economy. If sales per share for an industry in thisstage of the life cycle were predicted to increase by 20 percent, this would imply agrowth rate of the aggregate economy of 20 percent. A sales growth rate of 20 percent ishigh for an industry in the fourth stage of the industrial life cycle.1You know the following about your industry (I) and the market (M):表4Discuss what difference you would expect in the P/Es, and explain why you expect this difference.答案The industry (I) would have a lower P/E than the market (M) because:(a) ROE for the industry is lower than the market ROE。(b) Growth for the industry is lower than for the market。 and(c) Beta for the industry is higher (more risk) than for the marketIndustry Marketg = RR X ROE g = .60 x .12 = .072 g = .55 x .16 = .088Assuming RFR = 6% and 16%, k = RFR + β(Rm – RFR)k = .06 + (.16 .06) k = .06 + (.16 .06)= .165 = .16D/EP/E = P/E = .40/(.165 .072) P/E = .45/(.16 .088)k – g = .40/.093 = = .45/.072 = 1Using book value to measure profitability and to value a pany’s stock has limitations. Discussfive such limitations from an accounting perspective. Be specific. [10 minutes]答案The putation of book value is: (assets liabilities) / of sharesAccounting conventions can affect this putation by increasing or decreasing any ofthe three ponents: assets, liabilities, or number of shares.Increasing or Decreasing Assets? Accountants’ use of historic cost does not recognize the replacement value of assetsand is, therefore, not an accurate measurement of an asset’s value. This isparticularly true of real estate assets.? Several assets with real economic value are ignored by accountants. Internallydeveloped goodwill, management expertise, market share, and technologicalinnovation are just a few of the