Question

Which of the following statements is most accurate? O a. Firms with low PB ratios are value firms and tend to outperform high PB firms. O b. The biggest drawback of using PCF ratio is its inability to address operating efficiency. O c. Higher PEG ratios imply undervalued stocks. O d. PCF is a preferred relative measure compared to PE.

Answer 1

a appears plausible. Firms with low PB ratios are value firms and historically they have outperformed high PB firms over long term.

Higher PEG ratios imply overvalued stocks. PE is preferred over PCF.