The Correlation Between the Returns of IS and DS Is

question 39

Multiple Choice

The correlation between the returns of IS and DS is:

• A) +1.0
• B) -1.0
• C) + .3
• D) - .3
• E) 0.03

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Definitions:

Implied Share Price

The calculated value of a share based on future earnings expectations or business prospects.

Earnings Multiple

A valuation metric that indicates the ratio of a company's market price per share to its earnings per share (EPS), commonly used to gauge stock valuation.

Earnings Multiple

A valuation metric that shows how much investors are willing to pay for one dollar of earnings; commonly used in the P/E (price-to-earnings) ratio.

Extraordinary Item

Transactions and events that are both unusual and infrequent in nature, distinctly separate from the ordinary activities of the company, often excluded from the assessment of its ongoing operational performance.