Valuation Ratios

2. Price to Earnings is a theoretically correct method of valuing a stock. True or False

3. For a growing company, the forward P/E will typically be lower than the Trailing P/E. True or False

4. The historic average S&P500 P/E is around 30. True or False

5. The current S&P500 P/E Ratio is lower than the historic average level. True or False

6. In general, all else equal, higher interest rates and higher volatility result in lower P/E Ratios. True or False

7. In general, all else equal, higher growth rates and higher quality of earnings result in lower P/E ratios. True or False

8. Typically, when interest rates decline, consumers and businesses borrow and purchase more, increasing corporate EPS. True or False

9. Typically, when interest rates decline significantly, stocks start to become more attractive relative to bonds. True or False

10. We might expect the P/E Ratio of a company with a 5-year projected annual EPS growth rate of 6% to be close to the P/E Ratio of the S&P500. True or False