CIBC has 110 million shares outstanding, with a current share price of $94.50 per share. a) If the firm's market-to-book ratio is 7.85, what is the firm's book value of equity? b) Briefly explain what the market to book ratio tells us about a firm.
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CIBC has 110 million shares outstanding, with a current share price of $94.50 per share.
- a) If the firm's market-to-book ratio is 7.85, what is the firm's book value of equity?
- b) Briefly explain what the market to book ratio tells us about a firm.
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- The S&P 500 Index is one of the most commonly used benchmark indices for the U.S. equity markets. Consisting of 500 companies, it is a market value-weighted index. This means that each company’s performance is reflected in the index, weighted by the ratio of the company’s value to the total value of all the companies. Based on your understanding of P/E ratios, in which of the following situations would the average trailing P/E ratio (current price divided by earnings per share over the previous 12 months) of the S&P 500 Index be higher? a. Forecast earnings for S&P 500 companies are expected to rise in the future. b. Forecast earnings for S&P 500 companies are expected to fall in the future. You invest $100,000 in 40 stocks, 20 bonds, and a certificate of deposit (CD). To which kind of risk will you primarily be exposed? a.Portfolio risk b.Stand-alone risk Generally, investors would prefer to invest in assets that…The S&P 500 Index is one of the most commonly used benchmark indices for the U.S. equity markets. Consisting of 500 companies, it is a market value-weighted index. This means that each company's performance is reflected in the index, weighted by the ratio of the company's value to the total value of all the companies. Based on your understanding of P/E ratios, in which of the following situations would the average trailing P/E ratio (current price divided by earnings per share over the previous 12 months) of the S&P 500 Index be higher? O The outlook for the economy and the markets is for an improvement. O The outlook for the economy and the markets is for a downturn. You invest $100,000 in only one stock. To which kind of risk will you primarily be exposed? Portfolio risk O Stand-alone risk Generally, investors would prefer to invest in assets that have: O A high level of risk and low expected returns. O A low level of risk and high expected returns.2. If RTM's stock is currently trading at AED 24 and RTM has 25 million shares outstanding, shareholder equity of 100 million and cash of 5 million, What is the RTM's market-to-book ratio, the market capitalization and the enterprise value.
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