1. Chris
Smith of XYZ Pension Plan has historically invested in the stocks of only U.S.
domiciled companies. Recently, he has decided to add international exposure to
the plan portfolio. Identify and briefly discuss three potential problems than
Smith may confront in selecting international stocks that he did not face in
choosing U.S. stocks. ?
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2. Discuss
why estimating the value of a bond is easier than estimating the value of
common stock. ?
3. Under
what conditions will it be ideal to use one or several of the relative
valuation ratios to evaluate a stock? ?
4. Discuss a
scenario where it would be appropriate to use one of the present value of cash
flow techniques for the valuation. ?
5. Would you
expect the required rate of return for a U.S. investor in U.S. common stocks to
be the same as the required rate of return on Japanese common stocks? What
factors would determine the required rate of return for stocks in the United
States versus Japan?
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7. Explain
what it means for a firm to have a current ratio equal t0 0.50. Would the firm
be better off if the current ratio were 1.50? What if it were 15.0? Explain
your answer. ?
8. What
types of information do common-size financial statements reveal about the firm?
What is the best use of these common-size statements? ?
9. Prince
Albert Canning PLC had a net loss of £13,482 on sales, £138,793 (both in
thousands of pounds). What was the company’s profit margin? Does the fact that
these figures are quoted in a foreign currency make any difference? Why In
dollars, sales were $274,213,000. What was the net loss in dollars.?
