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Which of the following variables has an inverse relationship with the P/E ratio? Which of the following changes will likely lead to a higher P/E, assuming other factors are equal? a

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1. Which of the following variables has an inverse relationship with the P/E ratio?
2. Which of the following changes will likely lead to a higher P/E, assuming other factors are equal?
   a. A decrease in the dividend payout ratio
   b. An increase in growth rate of earnings
   c. An increase in the required rate of return
   d. A decrease in the dividend yield
3. Which of the following statements regarding P/E ratios is true?
   a. Generally, the riskier the stock, the higher the P/E ratio.
   b. In recent years, the small capitalization stocks had the highest P/E ratios.
   c. As interest rates increase, P/E ratios are expected to decline.
   d. Higher growth prospects often lead to lower P/E ratios.
4. ECONOMIC VALUE ADDED is the difference between:
5. Value stocks, such as those considered the Dogs of the Dow, will generally have:
6. Book value is:
7. Several analysts and empiricists recommend investing in stocks with what kind of price to book value ratios?
8. Which of the following statements concerning price to book value is true?
   a. There is an inverse relationship between price to book values and market prices.
   b. It is calculated as the ratio of price to the book value of assets.
   c. There is supporting evidence that stocks with low price to book values significantly outperform the market.
   d. Price to book value ratios for many stocks range from 5.5 to 10.5.
9. The price/sales ratio indicates:
10. A relatively new valuation technique that emphasizes the difference between a firm's operating profits and its cost of capital is called:
11. It is recommended that investors interested in the EVA approach should seek companies that have a return of capital in excess of ------- because this will likely exceed the cost of capital and the company is, therefore, adding value.