Question

In: Finance

What are the variables that affect the P/E ratio? Is the effect direct or inverse for...

What are the variables that affect the P/E ratio? Is the effect direct or inverse for each component?

Solutions

Expert Solution

The answer is in below attached images.

Please give upvote

jeff jeffy answered 3 years ago
Next > < Previous

Related Solutions

What may be a problem of comparing the P/E ratio of a stock to the P/E...
What may be a problem of comparing the P/E ratio of a stock to the P/E of the overall market?
1.) A)The P/E ratio of stock A is 25. The P/E ratio of stock B is...
1.) A)The P/E ratio of stock A is 25. The P/E ratio of stock B is 45. Their expected returns are the same. Why is the P/E ratio of stock B higher than that of stock A? B) The P/E ratio of stock A is 25. The P/E ratio of stock B is 45. Their expected growth rate is the same. Why is the P/E ratio of stock B higher than that of stock A?
What is 1. P/E ratio 2. Market-to-Book ratio
What is 1. P/E ratio 2. Market-to-Book ratio
1.      For this question we will be using P/E ratio. To find a company's P/E ratio,...
1.      For this question we will be using P/E ratio. To find a company's P/E ratio, use www.morningstar.com , enter the Johnson and Johnson stock symbol (JNJ) and request a basic quote. Once you have the basic quote, the P/E ratio is listed on a front page under Key Stat. Compare the P/E ratio of your company with the industry average. Is there a difference between these two numbers? Is the stock overvalued, undervalued, or properly valued? Why? In accordance...
What does a P/E Ratio indicate? Explain how you would feel about seeing a P/E ratio...
What does a P/E Ratio indicate? Explain how you would feel about seeing a P/E ratio of 188 for a company Explain how you would feel seeing a P/E ratio of 9 for a company Be sure to cover all three questions in your answer
P/E Ratio is 75.40 and Beta is 1.62 Amazon is company 1. compare the P/E ratio...
P/E Ratio is 75.40 and Beta is 1.62 Amazon is company 1. compare the P/E ratio of your company with the industry average or with a major competitor. How does your chosen company compare in their price compared to earnings? Is the stock overvalued, undervalued, or properly valued? Why? In accordance with your findings, is it reasonable to buy the stock? Please explain your answers. 2. CALCULATE THE CAPM Using the risk-free rate of 2%, and the 7.5% as market...
Value of Stock and P/E Ratio
Castle-in-Sand generates a rate of return of \(20 \%\) on its investments and maintains a plowback ratio of \(0.30 .\) Its earnings this year will be \(\$ 4\) per share. Investors expect a \(12 \%\) rate of return on the stock. Required: (a.) Find the price and \(\mathrm{P} / \mathrm{E}\) ratio of the firm. (b.) What happens to the P/E ratio if the plowback ratio is reduced to 0.20? Why? (c.) Show that if plowback equals zero, the earnings-price ratio,...
Value of Stock and P/E Ratio
    Castle-in-Sand generates a rate of return of  on its investments and maintains a plowback ratio of  Its earnings this year will be  per share. Investors expect a  rate of return on the stock. Required: (a.) Find the price and  ratio of the firm. (b.) What happens to the P/E ratio if the plowback ratio is reduced to 0.20? Why? (c.) Show that if plowback equals zero, the earnings-price ratio, E/P, falls to the expected rate of return on the stock.
4. The table below presents the historical P/E ratio for Apple Inc. The P/E ratio increased...
4. The table below presents the historical P/E ratio for Apple Inc. The P/E ratio increased from 2002 to 2003, and then decreased for a few years. a. Please explain how the increase and decrease of P/E ratio reflect investor view about Apple. (2 points) b. The current P/E ratio of Apple is 33.7. If we use the past 10 years average P/E ratio (from 2010-2019) as a benchmark, is Apple currently underpriced, fairly priced or overpriced? Please explain. (3...
Today, a Company’s Price to Earnings ratio (P/E Ratio) is 10.0x. P/E = Price per Share...
Today, a Company’s Price to Earnings ratio (P/E Ratio) is 10.0x. P/E = Price per Share / Earnings per Share. Tomorrow, if new information comes out and becomes public that the product sales will triple, what do you think could be the P/E ratio tomorrow?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT