Security Mkts and Equity Investments 1) What value of the Herfindahl index suggests a highly concentrated industry? 2) To match the return of price weighted/value weighted/unweighted index you would have to purchase the equivalent…? 3) What are the assumptions of technical analysis? 4) When would you use P/E0 vs P/E1 vs P/BV vs P/S vs P/CF
- <1800?
cielito Wrote: ------------------------------------------------------- > Security Mkts and Equity Investments > 1) What value of the Herfindahl index suggests a > highly concentrated industry? 1000< > 2) To match the return of price weighted/value weighted/unweighted index you would have to purchase the equivalent…? Price - purchase equal number of shares in the index. Value - purchase equal value of shares in the index - must trade often to maintain value. Unweighted - purchase equal dollar investment in shares of index. > 3) What are the assumptions of technical > analysis? Random pricing based on S&D, underlying trends, historical pricing predicts future pricing. > 4) When would you use P/E0 vs P/E1 vs P/BV vs P/S > vs P/CF P/E0 - current pricing P/E1 - next year’s pricing P/BV - earnings are unreliable P/S - ? P/CF - you don’t trust anyone at the company enough to use their earnings OR book valuation.
also p/bv can be used when there is negative earning. p/cf is more stable then p/e. bv and earning are more subject to accounting manipulation than cash flow.
>P/S - ? Difficult to manipulate earnings unlike P/E, and but revenue recognition difference makes it diff for comaprison.
sorry, meant ’
wow…I’m glad you brought that up. I had no clue about 1)
mar350 Wrote: ------------------------------------------------------- > sorry, meant ’
Ha, you’re right. I read it wrong. Just in time to take the test, too! …and 10,000 = 1 firm, monopoly.
wouldnt a HIGH concentration of firms suggest its very competitive?
In this case, no. It measures the market share possessed by firms. Higher concentration of market share by firms mean there are fewer firms controling the market. ex. 4 firms have 95% market share. Market in concentrated into four main players.