单选题 Assuming that a company"s ROE is 12% and the required rate of return is 10%, which of the following would most likely cause the company"s P/E ratio to rise?
【正确答案】 A
【答案解析】The expected inflation rate is a component of k e ( through the nominal risk free rate), k e can be represented by the following: nominal risk free rate + stock risk premium, where nominal risk free rate = [ ( 1 + real risk free rate) ( 1 + expected inflation rate) ] - 1. If the rate of inflation decreases, the nominal risk free rate will decrease, k e will decrease. The spread between k e and g, or the P/E denominator, will decrease. P/E ratio will increase.