A Firm Has an Earnings Retention Ratio of 40

question 31

Multiple Choice

A firm has an earnings retention ratio of 40%. The shares have a market capitalisation rate of 15% and an ROE of 18%. What is the share's P/E ratio?

• A)12.82
• B)7.69
• C)8.33
• D)9.46

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Definitions:

Lower Partial Standard Deviation

A measure of the risk of negative asset returns, focusing only on the volatility of returns that fall below the average.

Extremely Negative Returns

Refers to significantly below-average returns on investments, often resulting in substantial losses.

Value At Risk

A financial metric used to estimate the potential loss in value of a portfolio over a defined period for a given confidence interval.

Extreme Negative Returns

Significantly below-average returns, often considered outliers, that can severely impact an investment's overall performance.