1. a) Which two of the following statements are true of a high price earnings ratio?

a) Investors are expecting high future growth in the value of the shares.

b) It may be an indication that shares are overvalued.

c) It may be an indication that shares are undervalued.

d) Investors are not willing to pay more for a share than the profit allocated per share.

1.b) Wanda's Warehouse declared a dividend of 50 Pounds per share, and their shares are trading at a price of 250 Pounds per share in the market.

Given this, the dividend yield is calculated as 20 percent.

Select one:

- True

- False

1.c) What does a dividend payout ratio of 1/3 mean?

Select one:

a) For every 1 Pound profit earned per share, 3 Pounds was paid out as a dividend.

b) 3 Pounds per share was paid out to shareholders in the form of dividends.

c) 3 percent of the value of the return on investment in a share is attributable to dividends.

d) For every 3 pounds profit earned per share, 1 pound was paid out as a dividend.

1. d) Which two of the following actions may improve the return on total assets ratio?

a) Manufacturing more components in-house rather than outsourcing activities

b) Reducing assets by selling machinery that is no longer in use

c) Investing in more inventory

d) Increasing net profit