1.Proprietary Technologies, Inc., (PTI) has a leading price-to-earnings (P/E) ratio of 38 while the median leading P/E of a peer group of companies within the industry is 28. Based on the method of comparables, an analyst would most likely conclude that PTI should be:

A)   bought as an undervalued stock.

B)   bought on margin as an undervalued stock.

C)   viewed as a properly valued stock.

D)   sold or sold short as an overvalued stock.

2.Proprietary Technologies, Inc., (PTI) has a leading price-to-earnings (P/E) ratio of 28 while the median leading P/E of a peer group of companies within the industry is 28. Based on the method of comparables, an analyst would most likely conclude that PTI should be:

A)   bought as an undervalued stock.

B)   bought on margin as an undervalued stock.

C)   viewed as a properly valued stock.

D)   sold or sold short as an overvalued stock.

3.Proprietary Technologies, Inc., (PTI) has a leading price-to-earnings (P/E) ratio of 28 while the median leading P/E of a peer group of companies within the industry is 38. Based on the method of comparables, an analyst would most likely conclude that PTI should be:

A)   bought as an undervalued stock.

B)   sold as an overvalued stock.

C)   sold short as an overvalued stock.

D)   viewed as a properly valued stock.

答案和详解如下：

1.Proprietary Technologies, Inc., (PTI) has a leading price-to-earnings (P/E) ratio of 38 while the median leading P/E of a peer group of companies within the industry is 28. Based on the method of comparables, an analyst would most likely conclude that PTI should be:

A)   bought as an undervalued stock.

B)   bought on margin as an undervalued stock.

C)   viewed as a properly valued stock.

D)   sold or sold short as an overvalued stock.

The correct answer was D)

The price per dollar of earnings is considerably higher than that for the median of the peer group, which implies that it may well be overvalued.

2.Proprietary Technologies, Inc., (PTI) has a leading price-to-earnings (P/E) ratio of 28 while the median leading P/E of a peer group of companies within the industry is 28. Based on the method of comparables, an analyst would most likely conclude that PTI should be:

A)   bought as an undervalued stock.

B)   bought on margin as an undervalued stock.

C)   viewed as a properly valued stock.

D)   sold or sold short as an overvalued stock.

The correct answer was C)

The price per dollar of earnings is the same as that for the median of the peer group, which implies that it is likely properly valued.

3.Proprietary Technologies, Inc., (PTI) has a leading price-to-earnings (P/E) ratio of 28 while the median leading P/E of a peer group of companies within the industry is 38. Based on the method of comparables, an analyst would most likely conclude that PTI should be:

A)   bought as an undervalued stock.

B)   sold as an overvalued stock.

C)   sold short as an overvalued stock.

D)   viewed as a properly valued stock.

The correct answer was A)

The price per dollar of earnings is considerably lower than that for the median of the peer group, which implies that it may well be undervalued.