Tutorial answers 6 - 2206 AFE Tutorial answers 6 Week 9...

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Week 9 Chapter 14 Questions 2,3 p.572 Problems 1 (priority),2 (priority), 4 (priority) p. 574 These problems are a part of preparation for the group assignment. For the problems above students should chose industry/stock (s) from their assignment. Problems 12, 10, 3, 9 (in order of preference, higher preference first), pp.574-576. Answers Chapter 14 Questions 2 p.572 A cyclical stock would be any stock with a high beta value. Examples of high beta stock would include stocks of typical growth companies and some investment firms. As to whether the issuing company is a cyclical company will depend on the specific selection. Questions 3 p.572 The biotechnology firm may be considered a growth company because (1) it has a growth rate of 21 percent per year which probably exceeds the growth rate of the overall economy, (2) it has a very high return on equity and (3) it has a relatively high retention rate. However, since a biotechnology firm relies heavily on continuous research and development, the above-average risk will require a high rate of return. Therefore, it is unlikely that the stock would be considered a growth stock due to the extremely high price of the stock relative to its earnings. Problems 1,2 and 4 (p.574) Student exercises. They have to answer these questions based on the analysis of their stocks. Problem 12 (p.576-577)
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Tutorial answers 6 - 2206 AFE Tutorial answers 6 Week 9...

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