1. Which of the following statements concerning price to book value is true?
There is an inverse relationship between price to book values and market prices
It is calculated as the ratio of price to the book value of assets
There is supporting evidence that stocks with low price to book values significantly outperform the market
Price to book value ratios for many stocks range from 5.5 to 10.5
2. Which of the following changes will likely lead to a higher P/E, assuming other factors are equal?
A decrease in the dividend pay-out ratio
An increase in growth rate of earnings
An increase in the required rate of return
A decrease in the dividend yield