______6) On 4/19/18 AutoZone closed at just under $604 per share representing a PE ratio of 12.8 times earnings. The company also has a ROE that is negative. The reason for this odd ratio combination is that:

1. The stock is significantly over valued
2. The stock is significantly under valued
3. The company has bought back significant treasury stock and has negative equity
4. The company has chosen to be very lightly leveraged

______7) Profit margin is 10%, asset turnover is 0.5, financial leverage is 2.0, earnings per share are $2.00 and there were no dividends. Which of the following statements is correct?

A. The return on assets is greater than the return on equity

B. The return on equity is greater than the sustainable growth rate

C. The sustainable growth rate is greater than the return on assets

D. The stock is over valued

Please give an explanation for the correct answers