Which of the following is incorrect? Select one: A. Your relative valuation could be right at...

Which of the following is incorrect?

Select one:

A. Your relative valuation could be right at the same time when the stock is truly overvalued.

B. Studies have found that PE ratio is more sensitive to changes in expected growth in low interest rate environment.

C. A potential problem for sector-specific multiples (e.g., EV/subscribers) is that it is hard to define the relationship between the EV and the number of subscribers.

D. Market may respond to earnings surprises less significantly in a low interest rate environment.

Solutions

Expert Solution

Answer d. Incorrect

Your relative valuation could be right at the same time when the stock is truly overvalued which means the other companies in the same industry yet to spot the true value of the company in the market which means the other firms represent the buying opportunity in comparison to your relative valuation firm.

Yes PE ratio is more sensative to changes in expected growth in low interest rate environment as growth produces cash flows in future and its present value is much higher at lower interest rates which means the effect of changes in growth rate on present value tend to be higher.

It is very difficult to define the relationship between EV and number of subscribers correctly and accurately.It becomes difficult to assess the relationship in order to value the company.As this does involves any financial term.

Market responds significantly in the low interest rate environment as it signifies more earnings potential in the future of the company.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Which of the following statements is INCORRECT? At the neuromuscular junction: Select one: A. The size...

Which of the following statements is INCORRECT? At the neuromuscular junction: Select one: A. The size of the synaptic cleft averages 30-50nm. B. The post-synaptic potential can be excitatory or inhibitory C. Acetylcholine is released from vesicles housed in the presynaptic membrane D. The post-synaptic membrane is highly folded

Which of the following is INCORRECT? Select one: a. Momentum accompanied by lower trading volume is...

Which of the following is INCORRECT? Select one: a. Momentum accompanied by lower trading volume is stronger and more sustained than momentum with higher trading volume b. Price momentum is more sustained and stronger for higher growth companies with higher price to book ratios than for more mature companies with lower price to book ratios c. In general, investors like negative skewness and they do not like positive skewness in returns. d. Option B and Option C e. Option A...

Which of the following statements is INCORRECT? Select one: a. A Common-size balance sheet is a...

Which of the following statements is INCORRECT? Select one: a. A Common-size balance sheet is a balance sheet with each line item expressed as % of total assets. b. Managers need to understand financial statement analysis to understand investment, financing, operating, and reporting decisions. c. The ratios that you calculate when conducting ratio analysis are defined by the FASB. d. Trend statements help you examine patterns of financial statement line items over time. How do you interpret “Days inventory held”?...

1. Which of the following statements about nitrogen gas is incorrect ? Select one: a. it...

1. Which of the following statements about nitrogen gas is incorrect ? Select one: a. it expands when its temperature is increased at constant pressure b. the distance between particles is about the same as for liquids c. the pressure is proportional to the concentration of particles present d. it expands to fill its container e. it is less dense than iron 2. What is the minimum volume of 0.1060 M AgNO3 that must be reacted with 100.0 mL of...

Which of the following statement is incorrect? Select one: a. Calvin Klein, Liz Claiborne, The Gap,...

Which of the following statement is incorrect? Select one: a. Calvin Klein, Liz Claiborne, The Gap, and other garment industry companies that manufacture clothing outside of the United States to control labor costs must balance the moral issues of human rights against their obligations to stockholders. b. Psychological and political factors also affect exchange rates. c. Most of the answers are correct. d. When the U.S. dollar strengthens against the Mexican peso, U.S. importers of Mexican goods will require more...

Which of the following statements is INCORRECT? Select one: a. Earned Capital consists of Retained Earnings...

Which of the following statements is INCORRECT? Select one: a. Earned Capital consists of Retained Earnings and Accumulated Other Comprehensive Income. b. Shares of Treasury Stock cannot be reissued in the stock market. c. Treasury Stock is comprised of shares that the firm repurchases in the stock market. d. Unrealized increases and decreases in value on securities held as investments (AFS investments) are included in Accumulated Other Comprehensive Income. What is the name of a security that has optional annual...

Which of the following statements about Na+ -K+ pump is incorrect? Select one: A. The Na+...

Which of the following statements about Na+ -K+ pump is incorrect? Select one: A. The Na+ -K+ pump is an antiport that moves the ions against their concertation gradient. B. The Na+ -K+ pump is an example of secondary active transport. C. The Na+ -K+ pumps potassium against its concentration gradient. D. The Na+ -K+ pump moves Na+ out of the cell and K+ inside the cell. E. The Na+ -K+ pumps sodium against its concentration gradient. In general, transport...

Which of the following statements is incorrect? Select all that apply.

Which of the following statements is incorrect? Select all that apply. The eukaryotic ribosome uses both the 5' cap and the 3' tail to correctly position the ribosome on the initation codon GTP is hydrolyzed by aminoacyl-tRNA synthetases to prepare amino acids for attachment to tRNAs The peptidyl-transferase activity of the ribosome is catalyzed by one of the protein domains of the large ribosomal subunit The Shine-Dalgarno consensus sequence is located downstream of the initiation codon and base pairs with the 16S rRNA of...

Which one of the following statements is incorrect?

Which one of the following statements is incorrect? 1) Scarcity is a universal phenomenon that arises because resources are limited 2) Microeconomics is the branch of economics which studies how individual decision-makers behave and interact with each other 3) Macroeconomics is the branch of economics which studies the functioning and performance of a society's economy as a whole (often with a focus on levels of and changes in aggregate measures such as the unemployment rate, inflation rate, and Gross Domestic Product growth rate). 4)...

The actions of which of the following could influence the money supply? Select one: a. the...

The actions of which of the following could influence the money supply? Select one: a. the federal reserve, commercial banks, and the nonbanking public b. the federal reserve and commercial banks only c. the nonbanking public only d. commercial banks only True or false: An open market purchase is expansionary monetary policy. If bank reserves are 200, the public holds 500 in currency, and the desired reserve-deposit ratio is 0.20, the money supply is ________. Select one: a. 1,300 b....

Subjects