A Research Analyst Wants to Compare the Dispersion in the Price-Earnings

question 128

Multiple Choice

A research analyst wants to compare the dispersion in the price-earnings ratios for a group of
Common stock with their return on investment. For the price-earnings ratios, the mean is 10.9 and
The standard deviation is 1.8. The mean return on investment is 25 percent and the standard
Deviation 5.2 percent. What is the relative dispersion for the price-earnings ratios and return on
Investment?

• A) Ratios = 32.0 percent, investment = 19.0 percent
• B) Ratios = 16.5 percent, investment = 20.8 percent
• C) Ratios = 132.0 percent, investment = 190.0 percent
• D) Ratios = 50.0 percent, investment = 10.0 percent

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Definitions:

Pollution

The presence in or introduction into the environment of a substance or thing that has harmful or poisonous effects.

External Benefit

A positive effect experienced by unrelated third parties resulting from a transaction or activity.

Subsidizing

The act of a government or organization providing financial support to reduce the cost of goods or services, often to encourage production or consumption.

External Benefit

A benefit that affects parties other than the buyers or sellers involved in a transaction, similar to a positive externality.