1. Relative Valuation III

2. PEG and Growth
The PEG ratio is estimated by dividing the PE by the expected growth rate. In using PEG, we do assume that PE increases proportionately with growth. This assumption (which is unrealistic) will lead you to be biased against
Low growth stocks
High growth stocks
No bias, since growth is neutralized

3. EV/EBITDA and cross holdings
The EV/EBITDA multiple is obtained by dividing the enterprise value (equity + debt – cash) by the EBITDA. If a firm has minority holdings in dozens of other companies, which of the following would hold?
It will look cheap on an EV/EBITDA basis
It will look expensive on an EV/EBITDA basis
Unclear

4. Low EV/EBITDA = Cheap?
A low EV/EBITDA multiple is considered a sign that a company is cheap. This is true if
The company does not have huge upcoming capital expenditure needs
The company has a high return on capital
The company does not have a high cost of capital
The company does not face a very high tax rate
All of the above