Reference no: EM131434534
For this question, assume taxes, depreciation and amortization are always equal to zero. Consider an all-equity firm with market capitalization equal to $10,000, earnings equal $600 per year, and with zero cash.
- What are the P/E and EV/EBITDA of the firm?The firm then decides to change its capital structure. It takes on $6,000 of debt and use all debt proceeds to buy back its own stock. The new debt is a perpetuity with interest rate equal to 3% per year.
- What are the P/E and EV/EBITDA of the firm after the capital structure change?
- Based on your answers to a) and b), explain why, compared to P/E ratios, EV/EBITDA is a conceptually superiorvaluation ratio
When defining the Russell 3000 Value and the Russell 3000 Growth (or Glamour) indices, Russell separate stocks according to Price to Book Ratios only. In contrast, when defining the S&P 1500 Value and S&P 1500 Growth (or Glamour) indices, S&P uses a combination of P/B, P/E and P/Sales. Discuss which approach is superior in terms of capturing the outperformance of Value over Growth (or Glamour).
Choose one signal from each of the following classes of signals: Value, Quality, Risk, Price Trends, and Information. For each signal, explain:
- How is the signal calculated?Explainprecisely what you calculate in each case
- Which direction does it go? (I.e., high signal means low or high stock returns going forward?)
- Provide onepotentialexplanation for why the signal is able to forecast relative stock returns.
In a meeting of an investment fund, Andrew is pitching stock ABC, while Ximena is pitching stock XYZ.
To support his pitch, Andrew mentions that most sell-side analysts covering ABC have "strong buy" recommendations, while most sell-side analysts covering XYZ have "hold" recommendations. Both stocks are part of the S&P1500 index. Does Andrew have a good point? Make sure to support your answer using output from Portfolio123.
Hint: How would you use Portfolio123 to verify whether analyst recommendations can forecast relative stock returns?
Backtest the performance of the UM Super Combo ranking system over MAX time period using three Universes: S&P 500, Russell 3000, and ALL FUNDAMENTALS. Use the following parameters: All Sectors, Minimum Price=3$, rebalancing every 4 weeks, 10 buckets.
- Copy paste the bar graphs with annualized returns.
- Explain as well as you can the calculations P123 does to generate the graphs above.
- In which of the Universes does the UM Super Combo ranking system "work" best? TO measure how well it works, consider the spread between the extreme buckets, and the smoothness (monotonicity) across buckets.
- Can you rationalize the results in c?
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Breach of the implied warranty of merchantability
: Good or Service? Brenda Brandt was admitted to Sarah Bush Lincoln Health Center (Health Center) to receive treatment for urinary incontinence. During the course of an operation, the doctor surgically implanted a ProteGen Sling (sling) in Brandt. Bran..
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What is the value of a stock now
: What is the value of a stock now that will first pay a annual dividend of $5.00 per share at t=6. It pays no dividend before then. After its starts its dividend at t=6, the firm is expected to continue growing its dividends at a 4% annual rate con..
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How each level of the organization learns
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When and how did you become aware of people
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Consider an all-equity firm with market capitalization
: For this question, assume taxes, depreciation and amortization are always equal to zero. Consider an all-equity firm with market capitalization equal to $10,000, earnings equal $600 per year, and with zero cash.
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Describe the diagnosis codes and how they are used
: Describe the Diagnosis codes and how they are used, impacting reimbursement. Describe the features of third-party payers. Explain the reimbursement methods used and the effects of coding on reimbursement.
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Potentially adversely affect the project lifecycle
: Project managers operate any variety of different environments. Many different variables can exist that can cause potential conflict with legal compliance and accepted ethical conduct. From your readings, Please provide an example of a variable, such..
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Particular basket of stocks and options
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What are values of slack and surplus for each constraint
: Solve the problem. Show work. What is the optimal “A” and “B” values? What is the optimal objective function value? What are the values of slack and surplus for each constraint? Suppose the coefficient of “A” changes from 2 to 3 and the coefficient o..
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