McDonald's Stock Currently Sells for $103

question 2

Multiple Choice

McDonald's stock currently sells for $103.It's expected earnings per share are $5.50.The average P/E ratio for the industry is 24.If investors expected the same growth rate and risk for McDonald's as for an average firm in the same industry,it's stock price would

• A)stay about the same.
• B)rise.
• C)fall.
• D)there is not enough information.

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Definitions:

Reciprocal Inhibition

A psychological principle that suggests the simultaneous activation of one psychological response can inhibit the occurrence of another incompatible response.

Counterconditioning

A behavior therapy technique where an undesired response to a stimulus is replaced with a desired behavior in the presence of that same stimulus.

Contingency Management

A type of behavioral therapy in which certain behaviors are reinforced through rewards or consequences to modify behavior.

Response Generalization

The extension of learned responses to stimuli that are similar but not identical to the conditioned stimulus in operant conditioning.