Reading 28 practice problem number 5
The answer: “B is an incorrect answer. Asgard invests in firms that offer reasonable valuations and above-average expected cash flow growth during the next three years. The data, such as P/B and average expected three-year profit growth, are consistent with its declared style. Again, it is not necessarily inconsistent to emphasize these aspects while investing in a portfolio that has a lower dividend yield, slightly higher P/E, and lower price momentum.”
Asgard invests in firms that offer reasonable valuations and above-average expected cash flow growth. Therefore, Asgard should be growth style. Should the answer be: The data, such as P/B are inconsistent with its declared style because Asgard’s fund P/B is lower than index. Lower dividend yield, higher P/E are consistent with its declared style?
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