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1.
If a company with a beta of 3.0 is expected to get a return of 15 percent, what can we expect the return of the overall market to be?
5 percent. A beta of three indicates three times the earnings possibility of the overall market. Thus, the overall market's return would be only one-third that of our company.
2.
Low earnings can make a price/earnings ratio very high. This fact may not mean that the company is overvalued. Instead, there may simply be an industrywide ________.
Recession. A recession may lower earnings.
3.
A high inventory turnover ratio indicates that _______.
A company is managing its inventory efficiently. It is a measure of a company's success with inventory.
4.
Return on equity is a measurement that stock investors watch closely. It measures ________ compared to equity.
Earnings after taxes. In other words, return on equity measures what a company is earning for stockholders.
5.
You will find a company's audited financial statements in its ________.
Annual report. The annual report contains audited confirmations of its financial statements.
6.
There are reasons why a low price-to-book ratio may not be a good thing for investors. Which of the following is not one of those reasons?
The company is earning a high return on its assets. This is actually a good thing for investors.
7.
Taxes are among the expenditures on an income statement.