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Homework answers / question archive / 5(1 point) If the currency of your country is depreciating, this should imports

5(1 point) If the currency of your country is depreciating, this should imports

Finance

5(1 point) If the currency of your country is depreciating, this should imports. exports and A) stimulate; stimulate B) stimulate; discourage C) discourage; stimulate D) discourage; discourage 6. (1 point) An investment strategy that entails shifting the portfolio into industry sectors that are expected to outperform others based on macroeconomic forecasts is termed A) sector rotation B) contraction/expansion analysis C) life-cycle analysis D) business-cycle shifting 7. (1 point) The price-to-sales ratio is probably most useful for firms in which phase of the industry life cycle? A) start-up phase B) consolidation C) maturity D) relative decline 8. (1 point) Firms with higher expected growth rates tend to have P/E ratios that are the P/E ratios of firms with lower expected growth rates. A) higher than B) equal to C) lower than D) There is not necessarily any linkage between risk and P/E ratios.

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Answer 5 - b) stimulate, discourage.

Reason - If one country's currency depreciates, it causes import prices to decline in comparison to export prices. Therefore, depreciation of a country's currency tends to stimulate exports and discourage imports.

Answer 6 - a) sector rotation

Reason - Portfolio managers makes predictions and forecasts about the macroeconomic factors and accordingly shifts the portfolio into other industry sectors that are going to produce more yield. This strategy is common in the market popularly known as Sector Rotation (i.e shifting among the different investment sectors in order to maximize returns of a portfolio).

Answer 7 - a) start-up phase

Reason - There are four stages in an industry life cycles. In the initial phase of the life of a firm, its price-to-sales ratio will be maximum. So, in the start-up phase the price-to-sales ratio will be most useful for the firm.

Answer 8 - a) higher than

Reason - The firms having higher expected growth rate would have higher PE ratios in comparison to the firms having lower expected growth rate.

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