28. Within the context of the constant dividend growth model, the P/E ratio would go down if the risk (beta) of the firm goes and the market risk premium goes A up: down B. down: up C up: up 29 Ann Murray, CFA, has been assigned to analyze Davidson Corporation using the constant dividend-growth P/E ratio model. Murray assumes that Davidson's earnings and dividends will grow at a constant rate of 13,0% with a payout ratio of 0.25. If the required rate of return on equity is 14.0% and the ROE is 18.57%, the P/E ratio (P/E) is A 12.57 B. 13.46 C. 25.00 30. Tom Kaplan has been asked to use the DDM to determine the value of Hudson, Inc. Kaplan anticipates that Hudson's earnings and dividend will grow at 32% for 2 years and 13% thereafter. Using a two-stage dividend discount model and the data in the following to answer the question. Current dividend per share(D.) $0.2860 Required rate of return 14% What is the current price of a share of Hudson, Po? (Choose the closest answer.) A $44 B. $45 C. $46 31. An analyst has prepared a table of the average trailing twelve-month price-to-earning (P/E), price-to-cash flow (P/CF), and price-to-sales (P/S) for the United Corporation for the years 2005 to 2008. Year 2005 P/E 4.9 P/S 2006 6.1 P/CF 5.4 8.6 7.3 1.2 2007 2008 8.3 1.5 9.2 1.9 7.9 2.3 As of the data of the valuation in 2009, the trailing twelve-month P/E, P/CF, and P/S are, respectively. 9.2.8.0, and 2.5. Based on the information provided, the analyst may reasonably conclude that United shares are most likely: a. Overvalued b. Undervalued c. Fairly valued