Question 1

Below are some accounting number and market values (in million) for Fiat Chrysler, Honda, Tesla Group for 2015. These three auto makers are considered to be comparables for General Motors.

1. ApplymultiplesforPricetoSales(P/S)andPricetoEarnings(P/E)ratiosandpriceGMs3,000 common shares outstanding using the weights assigned by Analyst A and B as in Panel B.

2. Pleasecomputethe95%ConfidenceintervalforPortfolioManagerusingtheweightson Analyst A and B as in Panel C.

Panel A: Abbreviated Financial Statements of the benchmark Automakers Market

Fiat Chrysler Honda Tesla Group GM

Sales Earnings

$24,500 $10,000 $25,450 $3,600 $9,500 $1,300 $35,000 $ 10,100

Value

$55,000 $45,000 $44,000

Panel B: Analysts Weights on Financial Ratios

P/S P/E Analyst A 0.5 0.5

Analyst B 0.6 0.4

Panel C: Portfolio Manager (PM)s Weights on Analyst Estimates

PM Analyst A 0.4

Analyst B 0.6