Barbur,Inc

question 9

Multiple Choice

Barbur,Inc.reported net income of $12 million.During the year the average number of common shares outstanding was 3 million.The price of a share of common stock at the end of the year was $5.There were 400,000 shares of preferred stock outstanding on average and no dividends were declared and the preferred stock is noncumulative. The Price/Earnings ratio is approximately:

• A)1.00.
• B)1.25.
• C)1.42.
• D)6.25.

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Definitions:

Standard Deviation

A statistical measure that quantifies the variation or dispersion of a set of data points or investment returns.

Arithmetic Return

The simple average of a series of periodic returns of an investment.

Investment

The action of allocating resources, usually money, with the expectation of generating an income or profit.

Population

The total number of individuals within a specific area or of a particular species or group.