USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 207

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Assume that the dividend payout ratio will be 65 percent when the rate on long-term government bonds falls to 8 percent. Because investors are becoming more risk averse, the equity risk premium will rise to 7 percent and investors will require a 15 percent return. The return on equity will be 12 percent.
-Refer to Exhibit 9.1. What is your expectation of the market P/E ratio?

• A) 8.33
• B) 5.33
• C) 9.03
• D) 6.02
• E) 3.24

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Definitions:

Nucleic Acid

A molecule made up of nucleotides that carry genetic information or form structures within the cell, examples include DNA and RNA.

Complementary Strand

In genetics, this refers to a sequence of DNA or RNA that is made to pair with a specific sequence of nucleotides through base pairing.

DNA

DNA, or deoxyribonucleic acid, is a molecule that carries the genetic instructions used in the growth, development, functioning, and reproduction of all known living organisms and many viruses.

Complementary Strand

In molecular biology, a strand of nucleic acid that can form a double-stranded structure by matching each base with its complement.