Your country analysis suggests that markets in South America look attractive and therefore you decide to load your portfolio with the largest Brazilian, Chilean and Argentine stocks. You are employing:

A bottom-up, fundamental approach

A top-down, fundamental approach

Technical analysis with a quantitative overlay.

A factor-based investment strategy

Higher risk in the market, all else equal, suggests that the average P/E for a stock will:

Fall

Rise

Not change

It cannot be determined

Assume that the the Horton Company paid a dividend yesterday of $7.00, that the stock can grow 7% indefinitely and that you require a 17% return. A fair price is:

$41.18

$55.00

$70.00

$74.90

Company L has a P/E ratio of 15 and Company H has a P/E ratio of 30. A plausible explanation for these ratios is that:

Assuming the same risk levels, Company L has more expected growth than Company H

Company L has the same growth rate but less risk than Company H

While both companies will grow at the same rate for the next two years, Company L will stop growing while Company H will continue growing at that rate

Company H has dividends per share and earnings per share that are twice as large as Company L