Alpha Corporation Has a Price of $5 a Share,outstanding Shares

question 117

Multiple Choice

Alpha Corporation has a price of $5 a share,outstanding shares of 2.5 million,retained earnings of $1 million dollars,and a dividend yield of 2 percent.It has a price-earnings ratio which is

• A)high,perhaps indicating that people expect future earnings to rise.
• B)high,perhaps indicating that people expect future earnings to fall.
• C)low,perhaps indicating that people expect future earnings to rise.
• D)low,perhaps indicating that people expect future earnings to fall.

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Definitions:

Mixture

A physical combination of two or more substances in which each substance retains its own chemical identity and properties.

Alloy

A substance made by melting two or more elements together, at least one of them a metal, resulting in a material with characteristics different from the individual components.

Metallic Elements

Elements that are good conductors of heat and electricity, have a shiny appearance, and are malleable and ductile.

Homogeneous Mixture

A mixture in which the composition is uniform throughout, such as solutions where the solute is completely dissolved in the solvent.