Reference no: EM13484370

Answer true or false to the following statements, with a short explanation. A. A stock that sells for less than book value is undervalued. B. If a company's return on equity drops, its price/book value ratio will generally drop more than proportionately, i.e., if the return on equity drops by half, the price/book value ratio will drop by more than half. C. A combination of a low price-book value ratio and a high expected return on equity suggests that a stock is undervalued. D. Other things remaining equal, a higher growth stock will have a higher price-book value ratio than a lower growth stock. E. In the Gordon Growth model, firms with higher dividend payout ratios will have higher price/book value ratios.