CFA Practice Question

There are 96 practice questions for this study session.

CFA Practice Question

Which assumption will cause a company's shares to trade at a premium to their historical average multiple?

A. The company makes a major acquisition.
B. Earnings growth is likely to accelerate in the future.
C. The intensity of competition is likely to increase in the future.
Correct Answer: B

User Contributed Comments 1

User Comment
CFAJ why not a? wouldn't this anticipated increase in earnings growth have been priced in already and thus reflected in historical prices?
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