An Analyst Has Determined That the Intrinsic Value of IBM

question 57

Multiple Choice

An analyst has determined that the intrinsic value of IBM stock is $80 per share using the capitalized earnings model.If the typical P/E ratio in the computer industry is 22, then it would be reasonable to assume the expected EPS of IBM in the coming year is

• A)$3.64.
• B)$4.44.
• C)$14.40.
• D)$22.50. $80(1/22) = $3.64.

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Definitions:

Geocentric

A worldview or strategy that considers the entire globe as a potential market or action ground, promoting universal standards and approaches.

Low-Context

Referring to cultures or communication styles that rely more on explicit, direct language and less on context or nonverbal cues to convey meaning.

Multinational

Refers to a corporation or enterprise that operates in several countries but is managed from one (home) country.

Ethnocentric

An attitude or policy where one's own culture, nation, or group is considered superior to others, often leading to biased judgments.