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

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Definitions:

Mental Health

A state of well-being in which an individual realizes their own abilities, can cope with the normal stresses of life, can work productively, and is able to make a contribution to their community.

Social Life

Interactions, activities, and relationships that individuals engage in with others in society.

Physical Health

Physical Health pertains to the condition of an individual's body, including all systems' functioning and absence of disease.

General Adaptation Syndrome

A theoretical model describing the body's short-term and long-term reactions to stress, proposed by Hans Selye, comprising three stages: alarm, resistance, and exhaustion.