Song Corp's Stock Price at the End of Last Year

question 8

Multiple Choice

Song Corp's stock price at the end of last year was $28.50 and its earnings per share for the year were $1.30.What was its P/E ratio?

• A) 22.58
• B) 18.85
• C) 21.48
• D) 21.92
• E) 20.39

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Definitions:

Production Function

A mathematical representation of the relationship between inputs (like labor, capital) used in production and the output of goods and services that results from those inputs.

Fixed Costs

Fixed costs are expenses that do not change with the level of production or business activity.

Average-Fixed-Cost Curve

A graphical representation showing how the average fixed costs of production decrease as output increases, due to spreading fixed costs over a larger number of units.

Total-Cost Curve

A graph that shows the total cost of producing different quantities of a good or service.