Quiz 2

Growth Rates

Select the appropriate box by clicking on it with your mouse. There is only one correct answer for each question.

1.	If investors operate rationally, a company with a high growth rate will have a higher PE than a company with a low growth rate.

2.	If investors operate rationally, a company with a high growth rate will have a higher share price than a company with a low growth rate.

3.	The growth rate for a company within an industry such as computer software makers will generally be higher than the growth rate for a company within an industry such as furniture suppliers.

4.	The PE ratio for computer software makers should be higher than companies who make furniture.

5.	If the managers and owners of different businesses (for example: shoes, hotels, and cell phones) each ran their company in the most efficient way, companies in the same industry will have similar PEs and growth rates to each other, but not necessarily similar to other industries.