In the problems following use an equity risk premium of 55, Ask an Expert

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In the problems following, use an equity risk premium of 5.5 percent if none is specified. 1. If you were told that the average exercise price of the 50 million options in the previous problem was $6, estimate the value per share for ABV using the treasury stock approach. 2. You can compute the PE ratio using current earnings, trailing earnings, and for- ward earnings. a. What is the difference between the ratios? b. Which one is likely to yield the highest value and why?

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Financial Management, Finance

Category:- Financial Management
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