Does an increase in financial leverage increase p-e ratio

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Question: 1. During the 1990s and 2000s, many firms repurchased stock and borrowed to do so. What is the typical effect of stock repurchases on earnings-per-share growth and return on common equity? Predict how a firm that excessively engaged in these practices would have fared in the downturn in 2008.

2. Does an increase in financial leverage increase or decrease the (levered) P/E ratio?

Reference no: EM131491108

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