Which of the Following Statements Is Correct

question 5

Multiple Choice

Which of the following statements is correct?

• A) There is no clear relationship between ROCE and cost of capital to be used for discounted cash flow (DCF)
• B) The P/E ratio is a good indication of investors expectations and can be easily converted into a cost of capital of capital figure
• C) If a companies dividend yield is high this means that shareholders expectations are high and future dividends are expected to grow
• D) All of the above are correct

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Definitions:

Growth Rate

The rate at which a company's earnings or revenue increases over a specified period.

Chapter 7 Bankruptcy

A form of bankruptcy that involves the liquidation of a debtor's assets to pay off creditors, resulting in the discharge of remaining debts.

Chapter 11

The chapter of the bankruptcy code dealing with reorganization. Firms in bankruptcy proceedings are commonly said to be “in Chapter 11.”

Junk Bond

A high-yield but high-risk bond issued by corporations or municipalities, viewed as being below investment grade.