I'm not sure if I'm feeling lucky enough to gamble on this one. But, you know what they say, 'You miss 100% of the shots you don't take.' I'm going to go with C. If management can increase the EBITDA ratio by only 1.0%, the stock will be properly priced (all else equal).
Ha! These finance questions always try to trick you. I'm going to go with B. If the earnings retention rate increases, the value of the stock will increase (all else equal). Can't go wrong with good old-fashioned reinvestment, right?
Hmm, this is a tricky one. I'm going to go with D. If inflation expectations decrease, the value of the stock will increase (all else equal). That makes sense to me, as lower inflation would mean a higher real return on the stock.
I'm a bit stumped on this one. I'm leaning towards C, but I'm not 100% sure. If management can increase the EBITDA ratio by only 1.0%, the stock will be properly priced (all else equal). That seems like a reasonable assumption, but I'd have to double-check the math.
I think the correct answer is B. If the earnings retention rate increases, the value of the stock will increase (all else equal). This makes sense because a higher retention rate means the company is reinvesting more of its earnings, which should lead to higher future growth and stock value.
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