Bryan Borcher
FIN 3250
HW #2
I.
True/False Questions
1. One of the potential benefits of investing early for retirement is that an investor can receive
greater benefits from the compounding of interest.
True
2. Of all the techniques used in finance, the least important is the concept of the time value of
money.
False
3. A perpetuity is an annuity with perpetual payments.
True
4. Suppose an investor can earn a steady 5% annually with investment A, while investment B will
yield a constant 12% annually. Within 11 years time, the compounded value of investment B will
be more than twice the compounded value of investment A (ignore risk).
True
5. All else equal, a dollar received sooner is worth more than a dollar received at some later date,
because the sooner the dollar is received the more quickly it can be invested to earn a positive
return.
True
II.
Stock Screener
Go to Yahoo Finance – market data – stocks – stock screener
1. List on a spreadsheet all Aerospace/Defense – Major Diversified firms that meet the following
criteria:




Market capitalization is larger than 1 billion
Profit margin is greater than 10%
P/E ratio is less than 20
PEG is less than 3
Also list the values for each firm for each criterion.
Symbol
Company
BHARAT ELECTRONICS
BEL.NS LTD
GY
GenCorp Inc. Common Stock
S51.SI
SembMar
Market
Cap
74.28B
1.04B
8.48B
Profit
Margin
14.60%
14.60%
10.40%
P/E
8.16
7.32
15.68
PEG
2.76
0.4
1.41
2. If all else is equal, which firm is the best based on the table? Why?
The best firm according to the table is, GenCorp Inc. Common stock, because out of the three it
has one of the highest profit margins. The P/E ratio is the lowest which is good because the price
is good for the earnings, and the PEG ratio is closest to o which is good cause of the low premium
for high growth to come.
3. Boeing is not listed on the table. Use yahoo finance’s reported financials and key statistics to
determine why Boeing does not come through the screen.
One of the reasons it was not on the list is because the price per earning share is high which
means it cost a lot for not much earnings. Also the profit margin is less than 10%, and the PEG
ratio is good but is still more than the GenCorp Inc.
III.
Book Problems
Chapter 4, p 70-71
Problems
1, 2, 3, 4, 5, 6, 7, 9, 11, 12, 13, 15, 16, 20
Attached