Question:
Which of the following is/are true if a firm has a required rate of return equal to the ROE?I. The amount of earnings retained by the firm does not affect market price or the P/E. II. The firm can increase market price and P/E by increasing the growth rate. III. The P/E ratio is inversely proportional to the ROE of the firm.
| A. |
Only (I) above |
B. |
Both (I) and (II) above |
C. |
Both (I) and (III) above |
D. |
Both (II) and (III) above |
Answer» d. Both (II) and (III) above |
| Note: |
The above multiple-choice question is for all general and Competitive Exams in India. |
