Which of the Following Statements Is CORRECT

question 96

Multiple Choice

Which of the following statements is CORRECT?

• A) If a firm has the highest price/earnings ratio of any firm in its industry, then, other things held constant, this suggests that the
• Board of directors should fire the president.
• B) If a firm has the highest market/book ratio of any firm in its industry, then, other things held constant, this suggests that the
• Board of directors should fire the president.
• C) Other things held constant, the higher a firm's expected future
• Growth rate, the lower its P/E ratio is likely to be.
• D) The higher the market/book ratio, then, other things held constant,
• The higher one would expect to find the Market Value Added (MVA).
• E) If a firm has a history of high Economic Value Added (EVA) numbers each year, and if investors expect this situation to continue, then
• Its market/book ratio and MVA are both likely to be below average.

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Definitions:

Horizontal Merger

A horizontal merger is a business consolidation that occurs between firms that operate in the same industry, often leading to synergies and an expanded market presence.

Transition Team

A group of people tasked with managing and overseeing the process of change from one state or phase to another within an organization.

Fair Compensation

A remuneration strategy that provides equitable pay to employees based on their job role, experience, and performance, aiming to maintain fairness and motivation within the workforce.

Climate Survey

A tool used to gauge the overall atmosphere or mood within an organization, typically regarding employee satisfaction and engagement.