4. A firm has a P/B ratio that equals the industry average and its ROCE is lower than the industry average, which implies A. The firm has a higher P/E ratio than average firms in the industry B. The firm has a lower P/E ratio than average firms in the industry. C. The firm has the same P/E ratio as average firms in the industry. D. The P/E ratio cannot be determined.
4. A firm has a P/B ratio that equals the industry average and its ROCE is lower than the industry average, which implies A. The firm has a higher P/E ratio than average firms in the industry B. The firm has a lower P/E ratio than average firms in the industry. C. The firm has the same P/E ratio as average firms in the industry. D. The P/E ratio cannot be determined.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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4. A firm has a P/B ratio that equals the industry average and its ROCE is lower than the industry
average, which implies
A. The firm has a higher P/E ratio than average firms in the industry
B. The firm has a lower P/E ratio than average firms in the industry.
C. The firm has the same P/E ratio as average firms in the industry.
D. The P/E ratio cannot be determined.
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