Other Things Equal,if The

question 39

Multiple Choice

Other things equal,if the:

• A)required rate of return increases,the P/E ratio will rise.
• B)risk premium increases,the P/E ratio will rise.
• C)risk-free rate rises,the P/E ratio will fall.
• D)dividend payout increases,the P/E ratio will fall.

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Definitions:

Operating Activity

Transactions and events that are directly involved in the primary operations of a business, such as sales and service revenue, and associated costs.

Change In Cash

The difference in a company's cash balance over a specified period, resulting from its operating, investing, and financing activities.

Stock Market

The stock market is a collection of markets and exchanges where the buying, selling, and issuance of shares of publicly-held companies occur.

Going Concern

An accounting principle presuming that a company will continue operating and not go bankrupt or be liquidated in the foreseeable future.