Question 66

DuPont Analysis: It is often useful to decompose a firms ROE or ROA or ROIC into the product of several accounting ratios and to analyze their separate behaviors over time (i.e., trends) and across companies (i.e., cross sectional) within an industry.

True

False

Question 67

Growth Theory: The expected growth rate of earnings is related both to the firms expected

profitability (ROE) and to its dividend policy, more specifically the retention rate.

True

False

Question 69

Fiscal & Monetary Policy: The traditional tools of macro-policy are government spending and

tax collection, which constitute fiscal policy, and manipulation of the money supply, which

constitute monetary policy, primarily through the use of the fed funds rate, discount rate, open

market operations, and quantitative easing.

True

False

Question 70

Private Equity Business Model: The four-step process of a private equities manager is to

recapitalize the acquired public company, cut costs, maximize free cash flows, and finally, return

the company to the public market, usually via an IPO or sale to a strategic buyer.

True

False