Question (1) Which one of the following statements is correct about the PE ratio?

A. A firms PE ratio will always become higher after it increases its plowback ratio b.

B. Mature industries such as auto makers and airlines tend to have high PE ratios.

C. PE ratio reflects the reinvestment opportunities for firms. Given the plowback ratio, PE ratio increases with ROE.

Question (2) Which one of the following statements is correct about portfolio performance measures?

A. Treynor measure is the correct measure to use if you are considering combining one active mutual fund with the market index to form a new portfolio.

B. Treynor measure uses beta as the measure for risk and assumes the investor can diversify away the residual risks.

C. Sharpe ratio is the correct measure to use when we are forming a fund of funds.

Question (3) GE paid the most recent dividend D0 = $0.25. The market expected return is E(rM) = 3% and risk free rate is 0.5%. Delta has a beta of 1.2. In the next two years, the dividend grows by g1 = 20%. At the end of second year, the company starts a constant growth method with a plowback ratio b = 50%, and ROE = 4%.

What the intrinsic value is today?

A. P0 = 23.47.

B. P0 = 22.85.

Please help with these 3, thank you!