1. As the difference between the growth rate in ______ and the growth rate in ______ increases, the stock price is more likely to _____.

earnings; sales; decline

sales; pension assets; rise

pension assets; inventories; rise

earnings; inventories; decline

2. A stock currently has a P/E of 20. Which of the following conditions makes the stock a potential buy?

a historical P/E of 25

a historical P/E of 15

a historical payout rate of 20%

a historical payout rate of 80%

3. If a firm increases its debt ratio, we would expect in the short-term (hint: think equity multiplier)

ROE to increase which increases the growth rate which increases stock price

ROE to increase which decreases the growth rate which decreases stock price

ROE to decrease which increases the growth rate which decreases stock price

ROE to decrease which decreases the growth rate which increases stock price