Companies E and P Each Reported the Same Earnings Per

question 44

Multiple Choice

Companies E and P each reported the same earnings per share (EPS) , but Company E's stock trades at a higher price. Which of the following statements is correct?

• A) Company E probably has fewer growth opportunities.
• B) Company E is probably judged by investors to be riskier.
• C) Company E must pay a lower dividend.
• D) Company E trades at a higher P/E ratio.

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Definitions:

Alkaline

Referring to a basic, as opposed to acidic, substance with a pH level greater than 7.

Hydroxide Ions

Negatively charged ions, OH-, produced when a hydroxide compound dissolves in water, basic in nature.

Bases

Substances that accept protons according to the Brønsted-Lowry definition or donate electrons in the Lewis definition, commonly displaying a pH greater than 7.

Buffers

Substances that minimize changes in the pH of a solution when an acid or base is added to it, helping to maintain stability in biological systems.