Indicative of optimistic market

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Reference no: EM131933733

1. Suppose Chipotle has an ROE of 15%, an EPS of $1.25, and elects to plowback 25% of its earnings. Expected return (r) is 5%. What is the stock price?

a. $50

b. $75

c. $100

d. $125

2. Which of the following would be considered bullish (indicative of an optimistic market)?

a. Buying credit default swaps

b. The FED is selling treasury bonds

c. Venture capitalists are unsuccessful in converting ratchets into equity

d. Defined contribution funds are decreasing

Reference no: EM131933733

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