Question #3
Reading: Reading 22 Market-Based Valuation - Price and Enterprise Value Multiples
PDF File: Reading 22 Market-Based Valuation - Price and Enterprise Value Multiples.pdf
Page: 1
Status: Incorrect
Correct Answer: B
Your Answer: C
Question
All other variables held constant, the justified price-to-book multiple will decrease with a decrease in:
Answer Choices:
A. payout ratio
B. expected growth rate
C. required rate of return
Explanation
All other variables held constant, a decrease in expected growth rate will result in a
decrease in the justified price-to-book multiple.