Discuss the contention that differences in the performance of various firms within an industry limit the usefulness of industry analysis.
Answer to relevant QuestionsWhat were the results when industry risk was examined during successive time periods? Discuss the implication of these results for industry analysis.List the three variables that are relevant when attempting to determine whether the earnings multiple (P/E ratio) for an industry should be higher, equal to, or lower than the market multiple.What is the rationale for using the price/book value ratio as a measure of relative value?You are told that a company retains 80 percent of its earnings and its earnings are growing at a rate of about 8 percent a year versus an average growth rate of 6 percent for all firms. Discuss whether you would consider ...Given Cara’s beta of 1.75 and a risk-free rate of 7 percent, what is the expected rate of return for Cara assuming?a. A 15 percent market return?b. A 10 percent market return?
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