Question
In the problems following, use an equity risk premium of 5.5 percent if none is specified. 1.Ifyouweretoldthattheaverageexercisepriceofthe50millionoptionsinthepreviousproblemwas$6,estimatethevaluepershareforABVusingthetreasurystockapproach. 2.You can compute the PE ratio using current
In the problems following, use an equity risk premium of 5.5 percent if none is specified.
1.Ifyouweretoldthattheaverageexercisepriceofthe50millionoptionsinthepreviousproblemwas$6,estimatethevaluepershareforABVusingthetreasurystockapproach.
2.You can compute the PE ratio using current earnings, trailing earnings, and for- ward earnings.
a. What is the difference between the ratios?
b. Which one is likely to yield the highest value and why?
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Basic Finance An Introduction To Financial Institutions, Investments, And Management
Authors: Herbert B. Mayo
12th Edition
1337691011, 978-1337691017
