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LOS k: Calculate the P/E-to-growth ratio (PEG), and explain its use in relative valuation.
Q1. Good Sports, Inc., (GSI) has a leading price-to-earnings (P/E) ratio of 12.75 and a 5-year consensus growth rate forecast of 8.5%. What is the firm’s P/E to growth (PEG) ratio?
A) 150.00.
B) 0.67.
C) 1.50.
Q2. The relative valuation model known as the PEG ratio is equal to:
A) earnings per share growth rate / price-to-earnings.
B) price-to-earnings (P/E) / earnings per share (EPS) growth rate.
C) P/E × earnings.
Q3. Which of the following statements regarding the P/E to growth (PEG) valuation approach is least accurate? The P/E to growth (PEG) valuation approach assumes that:
A) there are no risk differences among stocks.
B) there is a linear relationship between price to earnings (P/E) and growth.
C) stocks with higher PEGs are more attractive than stocks with lower PEGs.
Q4. The definition of a PEG ratio is price to earnings (P/E):
A) divided by the average growth rate of the peer group.
B) divided by average historical earnings growth rate.
C) divided by the expected earnings growth rate. | 
发表于 2009-3-9 17:16
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