1. Define security analysis and intrinsic value. What are the factors that intrinsic value depends on?

2. What is a satisfactory investment?

3. Briefly define the three steps in security analysis.

4. Why is business cycle important to economic analysis? What are the two measures of business cycle?

5. Why is industrial analysis important?

6. What are the key issues in industrial analysis?

7. Explain the importance of ratio analysis.

8. Why is it necessary to base the analysis on historical and industrial standards?

9. Using the following table, compare the South Plains Chemical Company's financial ratios with the industry averages. Evaluate according to the following measures: liquidity, activity, leverage, profitability and common stock.

	South Plains Chemical Company	Industry averages
Current ratio	2.12	1.95
Receivables turnover	6.25	5.95
Inventory turnover	4.17	4.5
Total asset turnover	1.67	2.65
Debt-equity ratio	0.67	0.45
Times interest earned	4	6.75
Net profit margin	10%	8.50%
ROA	16.66%	22.50%
ROE	41.67%	32.20%
Earnings per share	$1	$2
Price/earnings ratio	25	20
Dividends per share	$0.25	$1
Dividend yield	1%	2.50%
Payout ratio	25%	50%
Book value per share	$2.40	$6.25
Price-to-book value	10.42	6.4