a. With all else held constant, a firm will have a higher P/E if its beta is higher. b. P/E will tend to be higher when ROE is higher (assuming plowback is positive). c. P/E will tend to be higher when the plowback rate is higher.

a. With all else held constant, a firm will have a higher P/E if its beta is higher. b. P/E will tend to be higher when ROE is higher (assuming plowback is positive). c. P/E will tend to be higher when the plowback rate is higher.

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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owing statements are true/false/uncertain.
(LO 13-3)
a. With all else held constant, a firm will have a higher P/E if its
beta is higher.
b. P/E will tend to be higher when ROE is higher (assuming
plowback is positive).
c. P/E will tend to be higher when the plowback rate is higher.

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