Question 1

What average annual proportion of the total number of public U.S.nonfinancial firms at year-end 1980 exited over the years 1981-2000 (i.e., the average attrition rate)?

Accepted Answer

The average annual attrition rate of public U.S. nonfinancial firms from 1981 to 2000 was 5.9%. This figure represents the average percentage of firms that exited each year over the 20-year period, indicating a relatively stable but slowly declining population of such firms.

Question 2

Which category of liabilities & equities had the smallest proportion in every year from 1980- 2000?

Accepted Answer

Preferred stock typically represents a smaller proportion of a company's capital structure compared to other forms of liabilities and equity. This is because preferred stock is less commonly issued than common stock, debt, and other forms of liabilities. Companies often rely more on these other sources for their financing needs.

Question 3

Over the years 1981-2000, 4,770 nonfinancial firms exited the U.S.markets for publicly traded equity.Which of the following was the most frequent reason for a firm's exit?

Accepted Answer

Merger or acquisition is the most frequent reason for a firm's exit from the U.S. markets for publicly traded equity. This trend reflects the consolidation in various industries and the attractiveness of mergers and acquisitions as a strategic move for many companies.

Question 4

For public U.S.nonfinancial firms in composite, the fractions of current assets and non-current assets (all in book values; year-end 2000) are approximately: 
$\begin{array}{cc}
&\text { Current } & \text { Non-current } \
&\text { Assets } & \text { Assets } \
a.&1 / 3 & 2 / 3 \
b.&1 / 2 & 1 / 2 \
c.&2 / 3 & 1 / 3
\end{array}$

Accepted Answer

The answer of For public U.S.nonfinancial firms in composite, the...

Question 5

For public U.S.nonfinancial firms over the years 1980-2000, the composite market-to-book equity ratio generally:

Accepted Answer

The composite market-to-book equity ratio for public U.S. nonfinancial firms generally increased from 1980 to 2000, reflecting growth in market valuations relative to book values during this period.

Question 6

Which groups of U.S.nonfinancial firms have the highest composite proportions of PP&E to TA?

Accepted Answer

S&P Transports and Utilities typically have the highest composite proportions of Property, Plant, and Equipment (PP&E) to Total Assets (TA) because these sectors are capital-intensive, requiring significant investment in physical assets to operate.

Question 7

Over the 20-year period of 1980-2000, the composite dividend yield of public U.S.nonfinancial firms has generally:

Accepted Answer

Over the 20-year period of 1980-2000, the composite dividend yield of public U.S. nonfinancial firms has generally decreased. This trend reflects various factors, including changes in tax policies, an increase in stock buybacks, and a shift towards growth investing, which often prioritizes reinvestment of earnings over dividend payouts.

Question 8

According to the composite sources-and-uses data presented in Chapter 1, the main net source of funds for U.S.nonfinancial firms over the years 1980-2000 is:

Accepted Answer

Retained earnings (net cash flow from operations) have historically been the main net source of funds for U.S. nonfinancial firms, as they provide a stable and internal source of financing that does not depend on external market conditions.

Question 9

Throughout the period 1980-2000, the composite proportion of the TA of U.S.nonfinancial firms accounted for by net PP&E generally ___
(i)____, and the proportion of TA financed by equity ___(ii)fairly steadily.
$\begin{array}{ll}
&\_\_(i)\_\_&\_\_(ii)\_\_\
a.&\text { decreased } & \text { increased } \
b.&\text { increased } & \text { decreased } \
c.&\text { increased } & \text { also increased } \
d.&\text { decreased } & \text { also decreased }
\end{array}$

Accepted Answer

The answer of Throughout the period 1980-2000, the composite proportion...

Question 10

Which category of composite assets (for public U.S.nonfinancial firms) showed the largest proportional decrease over the years 1980-2000?

Accepted Answer

The answer of Which category of composite assets (for public...

Question 11

The ownership structures of most publicly traded U.S.nonfinancial firms is better characterized by the term:

Accepted Answer

Most publicly traded U.S. nonfinancial firms have a diffuse ownership structure, meaning that their shares are widely held by a large number of shareholders, rather than being concentrated in the hands of a few individuals or entities.

Question 12

For public U.S.nonfinancial firms in composite, the fractions of liabilities (current plus non- current), and equities (all in book values, year-end 2000) are approximately: 
$\begin{array}{cc}
&\text { Liabilities } & \text { Equities } \
a.&1 / 3 & 2 / 3 \
b.&1 / 2 & 1 / 2 \
c.&2 / 3 & 1 / 3
\end{array}$

Accepted Answer