CFA Practice Question

There are 201 practice questions for this study session.

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 .
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