The Market Capitalization Rate on the Stock of Flexsteel Company

question 50

Multiple Choice

The market capitalization rate on the stock of Flexsteel Company is 12%.The expected ROE is 13% and the expected EPS are $3.60.If the firm's plowback ratio is 50%, the P/E ratio will be

• A)7.69.
• B)8.33.
• C)9.09.
• D)11.11.
• E)None of the options

---

Definitions:

Treasury Bonds

Treasury bonds are long-term government debt securities issued by the Department of the Treasury with a maturity of more than ten years.

Federal Budget

The government's estimate of revenue and expenditure for a forthcoming fiscal year.

GDP Gap

The amount of production by which potential GDP exceeds actual GDP.

Aggregate Demand

The total demand for all goods and services in an economy at a given overall price level and within a specific time period.