1. A firm might possess a price-to-earnings ratio that is lower than its normal price-to-earnings ratio because

a.

The market is pricing in positive abnormal earnings growth

b.

None of these answers

c.

The firms price-to-earnings ratio was calculated using cum-dividend rather than ex-dividend earnings

d.

The firms shares are overvalued

2.

Which of the following statement is true about screening analysis?

a.

Involve forecasting future payoffs

b.

Assume market is efficient

c.

Sell stocks with lowest multiples

d.

Buy stocks with lowest multiples