The Ordinary Share of Securetech Corporation Consistently Sells at a Market

question 109

Multiple Choice

The ordinary share of Securetech Corporation consistently sells at a market price of 20 times earnings, i.e., at a p/e ratio of 20. What would be the most likely effect of a 10 cent increase in Securetech's basic EPS?

• A) An increase in market price of approximately 10 cents per share.
• B) An increase in market price of approximately $2 per share.
• C) A reduction in the p/e ratio due to the larger EPS.
• D) Nothing, since market price reflects expectations of future earnings.

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Definitions:

Nodes of Ranvier

Gaps in the myelin sheath of nerve fibers, which facilitate rapid conduction of nerve impulses along axons by allowing the impulses to jump from one node to the next.

Myelination

The process of forming a myelin sheath around a nerve to increase the speed at which electrical impulses propagate along the nerve fiber.

Dendritic Spines

Small protrusions on dendrites of neurons that receive signals from other neurons and are key to synaptic strength and learning.

Axon Terminals

The very end of a branch of a nerve's axon, a long slender nerve fiber that conducts electrical signals to a nerve synapse.