© 2000 John Petroff
|
|
© 2000 John Petroff |
Questions for Chapter 5 Analytical Tools
Review questions
Q-5A.1
All tools of financial analysis must shed light on three major
aspects of company potential performance. Which are they?
Q-5A.2 Which two sets of
data must be studied by a financial analyst?
Q-5A.3 Should projections
be made by financial analysts?
Q-5A.4 What additional information
is sometimes provided to financial analysts by corporations?
Q-5A.5 How reliable is the
additional data received by financial analysts from corporations?
Q-5A.6 What data is received
by loan officers?
Q-5A.7 What is a business
plan? What does it contain? What is its purpose?
Q-5B.1
Distinguish between the analytical approaches of a lender and
an equity owner.
Q-5B.2 Establish similarities
of analytical approaches of lenders and equity owners.
Q-5B.3 What are the three
levels of financial analysis?
Q-5B.4 What is name given
to the method of rejecting prospective loan applicants on the
basis of a single ratio?
Q-5B.5 When several ratio
are combined for the basis of acceptance/rejection of loan applicants,
what is the method called?
Q-5C1.1
What is name given to financial statements where each element
is a percentage of the total?
Q-5C1.2 Are distortions caused
by inflation reduced when common size income statements are studied?
How?
Q-5C2.1
What is the name given to a statement where each element rate
of change from year to year, or index is shown instead of the
absolute amount?
Q-5C2.2 What is a growth
index statement supposed to show?
Q-5C3.1
What are the three rules that should be followed when constructing
ratios?
Q-5D.1
What care must be used when using a new source of industry ratios?
Q-5D1.1 What type of association
is Robert Morris Associates?
Q-5D1.2 Why is the median
rather than mean used in statistics reported in RMA?
Q-5D1.3 What is the most
common approach of comparison of a company with several product
lines? Are there simpler and more accurate alternatives?
Q-5D1.4 What is a ratio supposed
to reveal?
Q-5D2.1
Are all ratios containing a similar information in terms of earnings,
risk and growth? Or do they tend to show conflicts? Give examples
Q-5E.1
What is the name given to an analytical techniques that seeks
to determine if a correlation exists between an accounting number
and an economic variable?
Q-5E.2 Does correlation imply
causality? Discuss.
Q-5E.3 What is the minimum
number of observations necessary to run a regression?
Q-5E.4 What is the major
statistical problem in regressions with two or more exogenous
variables?
Q-5E1.1
What is the name given to the mathematical regression technique
that calculates coefficient estimates for the minimum of the sum
of squared residuals?
Q-5E1.2 How is the value
of a coefficient determined to be different than zero?
Q-5E1.3 What is the statistic
used to establish that some meaningful correlation is present
in the equation estimated?
Q-5E1.4 What is a desirable
value for R2? What is the maximum value of R2?
Q-5E2.1
What other estimation method than OLS are available to reduce
the distortions caused by autocorrelation?
Q-5E3.1
Give some of the possible transformation of the exogenous variable
when a non-linear relationship is assumed to be present in the
equation?
Q-5E4.1
In what circumstance a system of equations is estimated?
Q-5E4.2 What is the purpose
of a stepwise multiple regression?
Q-5E4.3 When is a rank-order
correlation used?
Q-5F.1
What mathematical procedure is used in a time-series analysis?
Q-5F.2 How many exogenous
data series are present in a time-series analysis?
Q-5F.3 Explain how time-series
analysis is derived from quality control.
Q-5F.4 Is time-series analysis
conducted and reported by any US government department?
Q-5F.5 What is seasonal adjustment?
Why is it part of time-series analysis?
Q-5F.6 What are the three
patterns that are investigated in a time-series analysis?
Q-5F.7 What are the steps
of time-series analysis?
Q-5F1.1
Explain why an autoregressive model is a stepwise multiple regression.
Q-5F1.2
What is the exogenous variable in a moving average regression?
Q-5F1.3
What is the exogenous variable in a trend analysis?
Q-5F1.4
Outline the Box-Jenkins method of deciding on the correct specification.
Q-5F2.1
Outline the traditional decomposition method.
Q-5F3.1
What is the purpose of data smoothing techniques?
Q-5G.1
What is the goal of linear programming?
Q-5G.2 In which circumstances
is it necessary to use linear programming?
Q-5G.3 Explain why "what
if" procedures in spreadsheets are similar to linear programming.
Q-5H1.1
What is the purpose of the expert opinion approach?
Q-5H1.2 Who are considered
experts in the expert opinion approach?
Q-5H1.3 What does the Delphi
technique accomplishes?
Q-5H2.1
Describe the type of situation where a decision tree approach
of analysis would be used?
Q-5H2.2 What is being estimated
in the decision tree approach?
Q-5H3.1
In what situations are simulations used?
Q-5H3.2 Why is a simulation
a probabilistic approach?
Q-5H3.3 When the values of
a potential event are taken from a random distribution, what is
the name given to the simulation?
Q-5I.1
Why is market research important for financial analysis?
Q-5I.2 Who provides the information
in a market research?
Q-5I.3 Would an outside analysis
ever perform a market research on a company product? Discuss.
Q-5I.4 Where are results
of market research often found?
Q-5I.5 What is the common
tool of market research?
Q-5I.6 What proportions of
reply to a questionnaire are good? And which indicate a problem?
Q-5I.7 What are the alternatives
to market research?
Q-5J.1
What are the basic tools of technical analysis?
Q-5J.2 Who are the major
users of technical analysis?
Q-5J.3 What are the premises
of technical analysis (i.e. why is it better than fundamental
analysis)?
Q-5J1.1
Explain why technical analysis aims at a target price.
Q-5J1.2 What is sought in
charts?
Q-5J1.3 Outline Dow theory.
Q-5J1.4 What is the name
given to chart where stock high, low and closing prices are recorded?
Q-5J1.5 How are bar charts
used to make trade decisions?
Q-5J1.6 What is the name
given to a unidimensional chart showing only significant price
changes of a given stock?
Q-5J1.7 When is buy or sell
signal detected in a point and figure chart?
Q-5J1.8 What does a relative
strength chart shows?
Q-5J2.1
List and explain major smart money indicators.
Q-5J2.2 List and explain
major contrary opinion indicators.
Q-5J2.3 What is breadth of
market?
| Previous: Readings |
|
Next: Exercises, Cases & Assignments |