A Firm Has a Stock Price of $55 Per Share

question 16

Multiple Choice

A firm has a stock price of $55 per share and a P/E ratio of 75. If you buy the stock at this P/E and earnings fail to grow at all, how long should you expect it to take to just recover the cost of your investment?

• A) 27 years
• B) 37 years
• C) 55 years
• D) 75 years

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Definitions:

Coefficient Alpha

A method for evaluating internal consistency, calculated by averaging the intercorrelations of all the items on a given test. The higher the coefficient alpha, the higher the internal consistency.

Structural Abnormalities

Physical changes or anomalies in the body's structures, often identified through medical imaging or physical examination.

Abnormal Behaviour

Patterns of emotion, thought, and action considered pathological (outside the normative range) by society or professional standards.