Which of the following statements is most correct? 1 - If two companies have the

Question

Which of the following statements is most correct? 1 - If two companies have the same ROE and the same risk they must have the same residual income (abnormal earnings) for the year 2 - If two companies have the same net book value and the same residual income this year, then their stock prices must be the same 3 - If two companies have the same ROE and the same stock price their earnings must be the same for the year 4 - If two companies have the same ROE, net book value, and cost of capital then their residual income must be the same for the year

Explanation / Answer

Option 2- If two companies have the same net book value and the same residual income this year, then their stock prices must be the same Seems to be correct.

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