- CFA Exams
- CFA Level I Exam
- Study Session 13. Equity Investments (2)
- Reading 41. Equity Valuation: Concepts and Basic Tools
- Subject 4. Multiplier Models

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**CFA Practice Question**

Under the P/E method derived from the DDM, which of the following does not impact the P/E ratio?

II. The required rate of return

III. The expected growth rate of dividends

I. The expected divided payout ratio

II. The required rate of return

III. The expected growth rate of dividends

A. I and III

B. II only

C. None of these

**Explanation:**All of them impact the P/E ratio: P/E1 = (D1/E1)/(k - g).

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**User Contributed Comments**
4

User |
Comment |
---|---|

Peter |
All of them impact P/E ratio so why does it make C correct? |

julamo |
The question goes "which of the following does NOT impact the P/E ratio?" As you said, they all impact the P/E ratio so "None of these" is the obvious answer. |

dan1987 |
double negative question, nearly caught me |

khalifa92 |
its more like an awareness exam than it is a cfa exam |