1. All else the same, a higher plow back ratio means a(n) _________P/E ratio (a)
ID: 2645019 • Letter: 1
Question
1. All else the same, a higher plow back ratio means a(n) _________P/E ratio
(a) higher
(b) lower
(c) unchanged
(d) unable to determine
2. You wish to earn a return of 10% on each of two stocks,A and B.Each of the stocks is expected to pay a dividend of $4 in the upcoming year. The expected growth rate of dividends is 6% for stock A and 5% for stock B. Using the constant growth DDM, the intrinsic value of stock A is
(a) will be higher than the intrinsic value of stock B
(b) will be the same as the intrinsic value of stock B
(c) will be less than the intrinsic value of stock B
(d) more information is necessary to answer this question
Explanation / Answer
Answer:
1. Plowback ratio = (Earnings Per Share
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