A Firm Has a ROE Equal to the Industry Average

question 80

Multiple Choice

A firm has a ROE equal to the industry average but its price to book ratio is below the industry average.You know that the firm's _________.

• A) earnings yield is above the industry average
• B) P/E ratio is above the industry average
• C) dividend payout ratio is too high
• D) interest burden must be below the industry average

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Definitions:

Thyroid

A gland in the neck that produces hormones regulating heart rate, blood pressure, body temperature, and weight.

Male Scrotum

A skin-covered sac that holds and protects the human male testicles outside the body.

Testes

The male gonads of the scrotum that produce sperm.

Secondary Sexual Characteristics

Physical features that distinguish the two sexes of a species, but are not directly involved in reproduction.