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Unformatted text preview: rease
decrease. increase Consider an adjustment to our basic model where the same entry process th<:Jt occurs in
Phases I and ll now occurs in Phases IV and I. Assume the same time-path of gro\Ylh rates.
Then. stock prices \.viii he _ _____ as we enter Phase I and the peak of the stock market
in Phase II will occur
a ) higher, soom:r
b l lower later
d .) ( higher~. later
lower, sooner 13. In Phase Ill of our stock market model. expected earnings arc ______ than actual
earnings and avcmge stock prices arc
a.) greater. necessarily falling b l less, possibly rising
c l greater. possibly rising
d) less , necessarily falling 14. In comparing the \·olatility of the U.S. stock market to that of a less developed economy such
as BraziL we would ·expcct Brazil to exhibit
<!SSCt price Jluctuations over the cycle. primarily because it has a ·- p;-op~~rtion of new firms . r1. l urcater. greater
b l ~mllller. ~mallcr
c l !!realer. smaller d) ~...
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- Winter '09