An Analyst Has Determined That the Intrinsic Value of HPQ

question 14

Multiple Choice

An analyst has determined that the intrinsic value of HPQ stock is $20 per share using the capitalized earnings model.If the typical P/E ratio in the computer industry is 25, then it would be reasonable to assume the expected EPS of HPQ in the coming year is

• A)$3.63.
• B)$4.44.
• C)$0.80.
• D)$22.50. $20(1/25) = $0.80.

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Definitions:

Active Transport

A cellular process that requires energy to move substances across cell membranes against a concentration gradient.

Concentration Gradient

The gradual difference in the concentration of solutes in a solution between two regions. In biology, it often refers to differences across a membrane.

Carrier

A molecule or protein that transports substances across a cell membrane, or a person or animal that transmits a disease-causing agent without showing symptoms.

Mediated Transport

The process of moving molecules across a cellular membrane through the use of specific protein channels or carriers.