The Price/earnings Ratio

question 10

Multiple Choice

The price/earnings ratio:

• A)is a measure of the relative expensiveness of a firm's common stock.
• B)does not usually change by more than 1.0 during the year.
• C)can be used to determine the cash dividend to be received during the year.
• D)is calculated by dividing the earnings multiple by net income.

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Definitions:

Stateville

A reference to Stateville Correctional Center, a maximum-security state prison for men in Crest Hill, Illinois, USA.

Discretion

The freedom to decide what should be done in a particular situation, often used in legal and law enforcement contexts.