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shutvik [7]
3 years ago
13

Suppose that a firm has a price-earnings ratio which is higher than a value deemed to be normal. Investors tend to infer from th

is information that a. the firm's bonds will increase in their ratings. b. the firm's bonds will decrease in their ratings. c. the firm's stock is over-valued and one should consider selling the stock. d. the firm's stock is under-valued and one should consider buying the stock. e. the firm will be paying increased dividends.
Business
1 answer:
Dmitrij [34]3 years ago
8 0

Answer:

(C) The Firm's stock is overvalued and one should consider selling the stock

Explanation:

Price Earnings Ratio is a measure of market price of stock in relation to it's earnings. It shows how well a company's stock is valued in the market.

Price Earnings Ratio = \frac{Market\ Price\ Per\ Share}{Earnings\ Per\ Share}

A high price earnings ratio would lead investors to believe that the firm's stock prices are higher than it's earnings which means the stock prices are overvalued.

This further means, the market price of those stocks is greater than their fair value and it would be beneficial to investors to sell such stocks as it would result into a gain.

Thus, a higher price earnings ratio will lead investors to infer that the firm's stock is overvalued and one should consider selling the stock.

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Situation analysis

I hope this helps (:
6 0
2 years ago
suppose the real rate is 3.4 percent and the inflation rate is 5 percent. what rate would you expect to see on a treasury bill?
Ghella [55]

the rate expected on the treasury bill is 8.57%. enter answer as a percent rounded to 2 decimal places.

The real rate is 2.1 percent

The inflation rate is 3.4 percent

To find the rate which is to be expected on a treasury bill we have to apply fisher's equation

1+R= (1+r)(1+h)

Therefore, the rate on the treasury bill can be calculated as follows

1+R= (1+r)(1+h)

r= 3.4%

= 3.4/100

= 0.034

h= 5%

= 5/100

= 0.05

R= (1+r)(1+h)-1

= (1+0.034)(1+0.05)-1

= (1.034×1.05)-1

= 1.0857-1

= 0.0857×100

= 8.57%

A Treasury invoice (T-invoice) is a brief-term debt obligation backed via the U.S. Treasury Department with an adulthood of one year or less. Treasury bills are generally bought in denominations of $1,000 even as a few can attain a denomination of $five million.

let's say an investor purchases a par price of $1,000 T-bill with an aggressive bid of $950. whilst the T-invoice matures, the investor is paid $1,000, thereby income $50 in interest on the funding.

U.S. Treasury bills are auctioned on a regular schedule. individuals should purchase T-payments from the government using the TreasuryDirect internet site. it is free to register, and it'll function like a brokerage account that holds your bonds. in addition to bidding on new troubles, You also can install reinvestments into securities of an equal type and time period. as instance, you can use the proceeds from a maturing fifty-two-week invoice to shopping for some other fifty-two-week invoice. sure brokerage corporations can also permit buying and selling in U.S. Treasuries.

To learn more about treasury bills visit here:

brainly.com/question/17204626

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7 0
11 months ago
From guided notes reading of 7 skills to make mill$ :
Mkey [24]

Answer:

From guided notes reading of 7 skills to make mill$ :

This book focuses on __soft_______ skills or behavioral ___competencies________.

Explanation:

Brooks Harper's "7 Skills to make mill$" is a motivational book which urges students to perform at their best during their school  days so that they can be prepared for the work life.  In a very unique manner, Brooks hampered on the importance of the seven skills, which he described with the acronym DOLLARS.  These include Diligence (hard work pays), Organization (Be your CEO, developing your GPA as your Goal, Plan, and Action and not just Grade Point Average), and Leadership (by making a difference).  Others include Learning (replacing ignorance with education), Accountability (Your name = Your Brand; enhance or diminish it), Relationship (a warning to mind your company), and lastly Speaking (the articulation of ideas to others).  These are the keys to success in life, which must be developed during school days.

7 0
3 years ago
Lindsey holt owns stock in the galloway gems company. she knows in advance that the dividend on this stock is a $1.50 per share.
solniwko [45]

According to the given statement Lindsey holt purchased preferred stock.

The correct option is B.

<h3>What is the preferred stock?</h3>

Preferred stock, which is a component of share capital and is commonly referred to as a combination indicator, is an asset that has any combination of features that common shares does not, such as those of an equity and a promissory note.

<h3>How do preferred stocks work?</h3>

securities with a repaired par value that pays dividends at a fixed rate, generally based on a proportion of the par value. The market price of preferred shares, like bonds, is dependent on changes in interest rates. When interest rates rise, the value of the preferred stock falls.

To know more about preferred stock visit:

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I understand that the question you are looking for is:

Lindsey Holt owns stock in the Galloway Gems Company. She knows in advance that the dividend on this stock is a $1.50 per share and that it is a promised or contractual and constant dividend . Given this, you know for sure that she purchased which type of stock?

A. Green chip

B. Preferred

C. Penny

D. Uncommon

E. Growth

4 0
1 year ago
Fields Cutlery, a manufacturer of gourmet knife sets, produced 20,000 sets and sold 23,000 units during the current year. Beginn
Andreyy89

Answer:

Net income under variable costing would be $429,000.

Explanation:

Under the variable costing method the most important point to understand here is that fixed cost of the previous period ( 3000 units in this case ) would not be carried over to current period. Which means that the fixed cost and cost of goods sold be less now and the profit will increase.

NET INCOME =

SALES                                   = $ 1035,000  ( 23,000 X 45 )

(-) COST OF GOODS SOLD  = ($ 391,000) ( 23000 X 17 )

 ( We have multiplied 23,000 units by 17 because now those fixed cost of $5 are not carried forward to this period)

GROSS CONTRIBUTION MARGIN  = $1035,000 - $391,000

                                                          = $644,000

(-)VARIABLE SELLING AND ADMINISTRATION EXPENSES = ($69,000)

 ( $115,000 X 60% )

CONTRIBUTION MARGIN = $644,000 - $69,000

                                           = $575,000

(LESS) FIXED COSTS          = ($146,000)   [ $100,000 + $46,000 ]

1) MANUFACTURING COST = 20,000 X $5

                                              = $100,000

2) SELLING AND ADMINISTRATION EXPENSES = $115,000 X 40%

                                                                                = $46,000

INCOME  = $575,000 - $146,000

                = $429,000

8 0
3 years ago
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