Assignment:
1. Discuss how risk and profitability factors cause differences in price-earnings ratios across firms. Explain the difference between abnormal and normal earnings.
2. A firm's value-to-book and market-to-book ratios may differ from one for a number of reasons. Discuss how a successful internally funded research and development program would create a situation where the value-to-book and market-to-book ratios differ from one.
100 words with reference.