Companies a and C Each Reported the Same Earnings Per

question 75

Multiple Choice

Companies A and C each reported the same earnings per share (EPS) , but Company A's stock trades at a higher price.Which of the following statements is CORRECT?

• A) Company A trades at a higher P/E ratio.
• B) Company A probably has fewer growth opportunities.
• C) Company A is probably judged by investors to be riskier.
• D) Company A must have a higher market-to-book ratio.
• E) Company A must pay a lower dividend.

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Definitions:

Metaphysis

The narrow portion of a long bone between the epiphysis (end part) and the diaphysis (shaft) that is responsible for the bone's growth in length.

Synaptic Pruning

The process of selective dying-off of nonfunctional synapses.

Myelination

The process of coating the axons of neurons with a fatty myelin sheath, which improves the speed and efficiency of neural signal transmission.

Synaptogenesis

The process of synapse formation.