If a Company Has a High Price to Book Ratio

question 47

Multiple Choice

If a company has a high price to book ratio (PB) and low price-earnings (PE) ratio, this suggests that:

• A) Earnings are expected to grow slowly or decline relative to current level, with low expected return on common stockholders' equity (ROCE)
• B) Earnings are expected to grow quickly relative to current level, but with low expected ROCE
• C) Earnings are expected to grow slowly or decline relative to current level, but with high expected ROCE
• D) Earnings are expected to grow quickly relative to current level, with high expected ROCE