Considering That a Firm Has a PE Ratio of 71

question 24

Multiple Choice

Considering that a firm has a PE ratio of 71.4 and an EPS of 0.1, what is the price of a stock that pays an annual dividend of $1.00?

• A)7.14
• B)71.4
• C)0.714
• D)0.0714

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Definitions:

Commodity

A basic good used in commerce that is interchangeable with other goods of the same type; commodities are often used as inputs in the production of other goods or services.

Income

Earnings garnered from employment or investing, often received periodically.

Budget Constraint

A line representing the combination of goods and services that a consumer can purchase with a given income.

Utility Function

A mathematical representation of how consumers derive satisfaction or utility from consuming goods and services.