The Following Information Is Available for Jase Company:Market Price Per

question 198

Multiple Choice

The following information is available for Jase Company:Market price per share of common stock$25.00Earnings per share on common stock$1.25​Which of the following statements is correct?

• A) The price-earnings ratio is 20 and a share of common stock was selling for 20 times the amount of earnings per share at the end of the year.
• B) The price-earnings ratio is 5% and a share of common stock was selling for 5% more than the amount of earnings per share at the end of the year.
• C) The price-earnings ratio is 10 and a share of common stock was selling for 125 times the amount of earnings per share at the end of the year.
• D) The market price per share and the earnings per share are not statistically related to each other.

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Definitions:

Simple Interest

The method of calculating interest charges based on the principal amount only, not compounding on accumulated interest.

Deposit

A sum of money placed into a bank account or given as security for a contractual obligation.

Ordinary Annuities

Fixed payments received or paid out over a designated series of periods where the payments occur at the end of each period.

Annuities Due

An annuity for which payments are made at the beginning of each period, rather than at the end.