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If a Company Has a High Price-To-Book Ratio (PB) and Low

Question 40

Multiple Choice

If a company has a high price-to-book ratio (PB) and low price-to-earnings (PE) ratio, this suggests that:


A) earnings are expected to grow slowly or decline relative to current level, with low expected return on common stockholders' equity (ROCE) .
B) earnings are expected to grow quickly relative to current level, but with low expected ROCE.
C) earnings are expected to grow slowly or decline relative to current level, but with high expected ROCE.
D) earnings are expected to grow quickly relative to current level, with high expected ROCE.

Correct Answer:

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