CFA Practice Question

There are 201 practice questions for this study session.

CFA Practice Question

The P/S ratio is positively related to ______.

I. dividend payout ratio
II. profit margin
III. required rate of return
IV. earnings growth rate
Correct Answer: I, II and IV

P/S = Net Profit Margin (1 - b) (1 + g) / (r - g).

User Contributed Comments 3

User Comment
weiw it is not clear that the divident payout ratio is positively related to P/S ratio if you put it into the mathematical way. Remeber 1-b still affects g.
sahilb7 Shouldn't it be negatively correlated with r?
Omi1987 if r goes up then P/S comes down. It is negatively correlated.
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