Answer true or false to the following statements, with a short explanation.

a. A stock that sells for less than book value is undervalued.

True ____ False ____

b. If a company's return on equity drops, its price–book value ratio will generally drop more than proportionately (e.g., if the return on equity drops by half, the price–book value ratio will drop by more than half).

True ____ False ____

c. A combination of a low price–book value ratio and a high expected return on equity suggests that a stock is undervalued.

True ____ False ____

d. Other things remaining equal, a higher-growth stock will have a higher price–book value ratio than a lower-growth stock.

True ____ False ____

e. In the Gordon growth model, firms with higher dividend payout ratios will have higher price–book value ratios.
True ____ False ____