Fundamental Analysis

Question 1

Intrinsic value formula

Answer 1

dividend * (1+ div growth)/discount rate - div growth)

Question 2

ROE formula

Answer 2

net profit margin * asset turnover * leverage

Question 3

goal of economic analysis

Answer 3

The goal of economic analysis is to
understand these shifts in the aggregate demand and supply curves.

Question 4

aggregate demand curve

Answer 4

he aggregate demand curve is the schedule of the amount of real output that consumers, firms, government,
and foreigners will buy at each price level. All things being equal, the lower the price level, the larger the real GDP.
A nation’s aggregate demand curve is derived from its total spending on goods and services at different price levels.
GDP increases as total spending increases. Total spending at a given price level is represented in the following
formula

Question 5

consumption is determined by

Answer 5

expectations, wealth, consumer debt levels, taxes.

Consumption (C) is the largest component of total expenditures.

Question 6

aggregate demand curve

Answer 6

C = Consumption expenditures by households
I = Private investment
G = Government purchases of goods and services
X = Gross exports
M = Gross imports

Question 7

private investment variables

Answer 7

expectation of real net profits, taxes, technological changes

Question 8

government spending variables

Answer 8

taxation, borrowing, printing money

Question 9

net exports variables

Answer 9

—also known as the balance of trade. If Canada’s GDP increases, the country’s net exports will decrease because its gross imports will increase with the
domestic economy’s level of income.
foreign incomes, tariffs, exchange rates

Question 10

supply curve variables

Answer 10

land resources, labour, capital, productivity, taxes, regulations

Question 11

aggregate supply curve

Answer 11

The aggregate supply curve is the schedule of real domestic output that businesses would be willing to produce
at each price level.