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Basic Question 2 of 2
ABC Corp. has a retention ratio of 40% and a long term growth rate of 4.8%. If the required rate of return for this stock is 11.2%, what is the justified leading P/E ratio for ABC?
B. 5.63.
C. 9.38.
A. 5.36.
B. 5.63.
C. 9.38.
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I was very pleased with your notes and question bank. I especially like the mock exams because it helped to pull everything together.
Martin Rockenfeldt
Learning Outcome Statements
calculate and interpret the justified leading and trailing P/Es using the Gordon growth model;
CFA® 2025 Level II Curriculum, Volume 3, Module 21.