CFA Practice Question

There are 290 practice questions for this topic.

CFA Practice Question

If the present value of expected future residual earnings is negative, the justified P/B is:

A. less than 1.
B. 1.
C. greater than 1.
Correct Answer: A

This happens when the business earns less than its required return on investment.

User Contributed Comments 1

User Comment
quanttrader p/b = 1 + pv(expected earnings)/b .
You need to log in first to add your comment.