20. An analyst gathers the following information about two companies in the same industry: Company A...
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20. An analyst gathers the following information about two companies in the same industry: Company A Company B $20 $26 12% 50% Book value per share Market price per share Return on equity $40 $44 15% 30% Retention ratio What is the most appropriate conclusion regarding investors' expectations? Compared to company B, company A has: a. Higher intrinsic value as reflected by its higher market price b. Higher sustainable growth as reflected by its higher return on equity Lower future investment opportunities due to its lower price-to-book ratio d. Stay the same C. 20. An analyst gathers the following information about two companies in the same industry: Company A Company B $20 $26 12% 50% Book value per share Market price per share Return on equity $40 $44 15% 30% Retention ratio What is the most appropriate conclusion regarding investors' expectations? Compared to company B, company A has: a. Higher intrinsic value as reflected by its higher market price b. Higher sustainable growth as reflected by its higher return on equity Lower future investment opportunities due to its lower price-to-book ratio d. Stay the same C.
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Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
Posted Date:
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