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

question 22

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.

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Definitions:

Centralizing Production

The process of consolidating production activities and operations into a single or fewer locations to improve efficiency and control.

Meganational Strategy

A business approach that emphasizes global-scale operations and market presence.

Differentiation Strategy

A marketing strategy in which a company develops a unique product or service to stand out from competitors.

Cost-Leadership

A competitive strategy that aims to achieve the lowest cost of operation within the industry, often leading to lower prices for consumers.