Which of the Following Statements Is CORRECT

question 10

Multiple Choice

Which of the following statements is CORRECT?

• A)If Firms X and Y have the same P/E ratios, then their market-to-book ratios must also be equal.
• B)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.
• C)If Firms X and Y have the same earnings per share and market-to-book ratio, they must have the same price/earnings ratio.
• D)If Firm X's P/E ratio exceeds that of Firm Y, then Y is likely to be less risky and/or be expected to grow at a faster rate.
• E)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.

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Definitions:

Dependent Variables

In experimental research, the variable that is being measured or tested, and is expected to change as a result of manipulations to the independent variable.

Experimental Test

An experimental test is a research method where the researcher manipulates one or more variables under controlled conditions to study their effect on other variables.

Hypothesis

A proposed explanation for a phenomenon, based on limited evidence as a starting point for further investigation.

Test Validity

The extent to which a test measures what it is intended to measure and the accuracy of the test results.