Dear MEL Topic Readers,
ChatGPT passes exams from law and business schools
You might have used a chatbot, or chatterbot, an online chat
conversation via text or text-to-speech, to get information, instructions, or solutions
instead of a human agent. Launched in late November last year, ChatGPT (Generative
Pre-trained Transformer) is an advanced chatbot developed by OpenAI. It has
been used to generate essays, stories, and song lyrics in response to what a user
asks. Recently, ChatGPT answers and essays were graded by university professors.
Surprisingly, they passed exams in graduate schools for law and business. This
could mean that any student can use the Ai app not only to answer questions but
also to write essays and reports. The app definitely shortens the time for
research, studies, and even document creation.
For example,
Question: Which indicator is more accurate to predict the future growth
potential of a corporation, PBR or ROE?
ChatGPT: Both the price-to-book ratio (P/B ratio) and the return on
equity (ROE) are financial ratios that can be used to evaluate a corporation's
growth potential. However, they measure different aspects of a company's
financial performance and provide different information.
The P/B ratio compares a company's market capitalization to its book value,
which is the value of the company's assets minus its liabilities as reported on
its balance sheet. A lower P/B ratio indicates that a company's stock is
undervalued relative to its book value, which could be a sign of potential
future growth.
Return on equity (ROE) is a measure of how well a company is generating
profits from its shareholders' equity. It is calculated by dividing net income
by shareholder's equity. A higher ROE indicates that a company is more
efficient at generating profits from its shareholders' investments, and it can
be used as a sign of a company's potential for future growth.
Both P/B ratio and ROE are important indicators to evaluate a company's
financial performance, but they provide different information. P/B ratio gives
an idea about the company's valuation and ROE measures the efficiency of the
company in generating profits from shareholders' investments. It's important to
look at both indicators along with other financial metrics like revenue and
earnings growth, debt levels, etc. to get a comprehensive picture of a
company's financial health and potential for future growth.