Which of the following statements is CORRECT?
A) if firms x and y have the same net income, number of shares outstanding, and price per share, then their market-to-book ratios must also be the same.
B) if firms x and y have the same p/e ratios, then their market-to-book ratios must also be the same.
C) if firms x and y have the same net income, number of shares outstanding, and price per share, then their p/e ratios must also be the same.
D) if firms x and y have the same earnings per share and market-to-book ratio, they must have the same price earnings ratio.
E) if firm x's p/e ratio exceeds that of firm y, then y is likely to be less risky and also to be expected to grow at a faster rate.

Question

Quizplus · Accepted Answer

No reason for a to be true. No reason for b to be true. c must be true, as EPS and P will be the same. No reason for d to be true. e is wrong, because high risk and low growth lead to low P/Es.

Which of the Following Statements Is CORRECT