A Firm Has an ROE Equal to the Industry Average

question 74

Multiple Choice

A firm has an 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:

Urgency

The quality or state of requiring immediate attention or action.

Relationship Goals

Objectives or desired outcomes that individuals aim to achieve within their interpersonal relationships.

Interaction

The reciprocal action or influence between two or more entities, typically resulting in a change or response.

Conflict Interaction

Describes the process by which disputes and disagreements between parties are communicated and managed.