Among the Factors That Might Lead to a Divergence from the Path

question 3

Multiple Choice

Among the factors that might lead to a divergence from the path of prices for a depletable resource predicted by the economic models are: (i) unexpected discoveries of new reserves; (ii) new technologies which reduce extraction costs.

• A)i and ii 
• B)i but not ii 
• C)ii but not i 
• D)neither i nor ii

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Definitions:

Earnings Multiple

A valuation ratio that compares a company's current share price to its per-share earnings, commonly used to gauge stock prices.

Abnormal Earnings

Earnings that are above or below the normal or expected level due to unusual circumstances or events.

Actual Earnings

The real profits generated by a company within a specific period, usually reported quarterly or annually.

Earnings Quality

An assessment metric that evaluates the degree to which a company's earnings are derived from sustainable sources and are repeatable, controllable, and bankable.