1. We have a stock which has a P/E of 12. It has 1 million outstanding shares and the equity is $2 million. Its net profitmargin, financial leverage and the ATO are .07, 1.3 and 1.6 respectively. Deriive the price for next year. What are 4 variables that affect P/E ratios? PLEASE: Show All Steps, Show All Work,
2. The systematic risks that are impacted by the firm’s operations and its capital structure are
a. Financial and business risk
b. Systemic and idiosyncratic risk
c. Beta and alpha risk
d. Business and financial
e. Financial risk and beta