The Average Japanese P/E Ratio Was Reported as Between 40

question 35

Multiple Choice

The average Japanese P/E ratio was reported as between 40 and 100 in recent years while the average U.S. P/E ratio was 25. The reason for the higher Japanese P/E ratio has been partially explained by:

• A) growth opportunities over stated earnings.
• B) understated earnings and low interest rates.
• C) overstated earnings and low interest rates.
• D) understated earnings and overstated growth opportunities.
• E) low interest rates and greater growth opportunities.

Understand the concepts and importance of yield management in service firms.

Comprehend the stages of the new product development process.

Define and recognize instances of disintermediation in marketing channels.

Identify the drawbacks and strategies of intensive distribution.

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Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present values.

Net Present Value

The gap between the present worth of money coming in and going out over an established duration.

Pretax Return

The income or profit of a company before income tax expenses are deducted.

Net Present Value

The contrast in present value between incomes and expenditures of cash across a given time period.