1. Long-term profitability is determined by: A) cost leadership. B) industry structure. C) supply and demand. 2) Infomaster Inc. is a financial web portal company that collects and translates financial news releases into Chinese for Chinese readers worldwide. The technology platform that Infomaster developed several years ago is now operating smoothly. Nevertheless from time to time, there are a few flaws in the system. Currently Infomaster is aggressively marketing its products via financial forums and investor websites. Last year, Infomaster was able to earn a small profit. Which stage of the industry cycle is Infomaster operating in? A) Mature. B) Growth. C) Pioneer. 3) Which of the following statements about dividend discount models (DDM) is least accurate? A) The DDM can be applied to all firms. B) The H-model is a two-stage growth model. C) The DDM can only be applied to firms that currently pay dividends.




r-man - 0% idreesz - 33% rus1bus - 33% Oal29 - 33% haha…


yiucp - 33%

This means the answers are B C C In for arguments!

idreesz Wrote: ------------------------------------------------------- > This means the answers are > > B > C > C > > In for arguments! Yep Correct Answers: 1) B Industry structure determines long-term profitability. 2) C Characteristics of a pioneer stage include: early development, low penetration of the market, net loss or barely break-even. Infomaster recently developed its product and is still working to improve it. It is aggressively doing marketing to gain more customers, and it managed to record a small profit last year. 3) C Although it is seldom used by analysts for this purpose, the DDM can be used to value any firm, even those that are not paying dividends. The future dividends must be projected as to amount, timing and growth; and this is difficult to do with confidence for some firms.

You are wrong on 3. And you know it. well done.

1.b 2.c 3.c

oops i entered my answers before seeing they were posted

I chose: 1. b 2. b 3. c I guess #2 should be c, but Oal29 you are wrong on #3 - per the reading on DDM theoretically you should be able to use DDM on any Co. since at some point the Co. will run out of profitable opportunities which at that point it should return earnings to investors in the form of Divs. -Granted that may be a long time, but you can form an assumption as to when that might happen and discount those assumed divs back to the present and form an opinion about current valuatioon. This reasoning also proves why c is the least accurate.

had B B C I knew C because I think I either had this question before or read it somewhere. For number 2, I was thrown off by that the product is now running smoothly.