Company J and Company K Each Recently Reported the Same

question 14

Multiple Choice

Company J and Company K each recently reported the same earnings per share (EPS) . Company J's stock, however, trades at a higher price. Which of the following statements is most correct?

• A) Company J must have a higher P/E ratio.
• B) Company J must have a higher market to book ratio.
• C) Company J must be riskier.
• D) Company J must have fewer growth opportunities.
• E) All of the statements above are correct.