Laura Is Considering Two Investments: Stock a and B

question 1

Multiple Choice

Laura is considering two investments: Stock A and B. Both stocks have a P/E ratio of 19. Stock A has an expected growth rate of 5% and stock B has an expected growth rate of 13%. Which is the better stock and why?

• A) Stock B is better because it is considered to be cheaper than Stock A.
• B) Stock A is better because it is expected to grow at a slower rate and therefore will be less risky than Stock B.
• C) Since the P/E ratios are the same, Laura would be indifferent between the two stocks.
• D) None of these statements is correct.

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Definitions:

Attitude Formation

The process by which individuals develop their perspectives and feelings towards objects, people, or events, based on their experiences and thoughts.

Attitude Formation

The process by which individuals develop their perspectives and feelings towards objects, people, or events based on experiences and influences.

Direct Instruction

A structured, explicit teaching method that includes clear, specific instructions and demonstrations followed by practice and feedback.

Vicarious Conditioning

Learning behavioral responses through the observation of others' reactions to stimuli, without direct experience.