Suppose the Earnings Per Share of a Stock Is $2

question 2

Multiple Choice

Suppose the earnings per share of a stock is $2 and the current price\earnings (P\E) ratio is 10. What is the current price of the stock?

• A)$5
• B)$8
• C)$20
• D)$40
• E)$35

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Definitions:

Nondirectional Correlation

A type of correlation that measures the strength and direction of a relationship between two variables, without assuming which variable influences the other.

Unidirectional Correlation

A correlation where an increase in one variable is associated with an increase in another or a decrease in one is associated with a decrease in the other, without implying causation.

Negative Correlation

An association between two variables characterized by the increase of one and the decrease of the other.

Nondirectional Correlation

A type of correlation that indicates a statistical relationship between two variables without specifying whether the relationship is positive or negative.