GFM,IncEarned $4 a Share Last Year and It Is Expected

question 78

Multiple Choice

GFM,Inc.earned $4 a share last year and it is expected to earn $5 a share next year.Assuming a P/E ratio of 10,the price of the company's stock should be

• A)$40 a share.
• B)$50 a share.
• C)$90 a share.
• D)$0.50 a share.

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Definitions:

Date of Record

The cut-off date set by a company in order to determine which shareholders are eligible to receive a dividend or distribution.

Earnings Per Share

Earnings per share (EPS) is a financial metric that represents the portion of a company's profit allocated to each outstanding share of common stock, indicating the company's profitability.

Excess Cash

The amount of cash holdings that exceed the normal operational needs of a company.

Stock Repurchase

A business operation where a company repurchases its shares from the market, leading to a decrease in the total number of shares available.