Question

Bodle, Kane, Marcus, 9e, Equity Valuation Consider a company with a P/E ratio of 15, in an industry with an average P/E ratio of 20, and the same required return (k) as the industry average. This company is potentially appropriate addition to an investor's portfollo for which of the following reasons? an Click the answer you think is right. V The firm's PVGO is higher than the industry average. The firm's PVGO is lower than the industry average. The stock could be considered a value investment. The firm's growth prospects are stronger than average for the industry Read about this Do you know the answer?

Answer 1

First option is correct.

Step-by-step explanation:

The company is potentially an appropriate addition to the investor's portfolio due to high PVGO ratio as the investor believes that company can earn better return by investing profit into future growth opportunities.