If a Stock That Has Earnings Per Share of $1

question 46

Multiple Choice

If a stock that has earnings per share of $1.50 is quoted in the Wall Street Journal as having a price-earnings ratio of 13, the closing price on that day must be:

• A)$13.50.
• B)$15.50.
• C)$17.50.
• D)$19.50.

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Definitions:

Marginal Costs

The cost incurred by producing one additional unit of a product or service.

Market Price

The amount at which a good or service is currently sold in the market, determined by supply and demand.

Produce

To create, manufacture, or grow goods and services for consumption or sale.

Firm

A business or company engaged in commercial, professional, or industrial activities.