The Retail Analyst at Morgan-Sachs Values Shares of the GAP

question 85

Multiple Choice

The retail analyst at Morgan-Sachs values shares of the GAP at $38.00 per share.They are using the average industry 'forward' P/E ratio of 17.Their forecasted earnings per share for next year is [blank].

• A)$0.54.
• B)$1.50.
• C)$2.24
• D)$4.20

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Definitions:

Amortized Cost

The progressive reduction of a debt or the cost of an intangible asset over a specified time period.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that is used globally to prepare public company financial statements.

Held to Maturity

A designation for financial assets which a company has the intention and ability to hold until a specified maturity date.

Available-For-Sale Securities

Financial assets that are purchased with the intent of selling before they reach maturity or when favorable market conditions exist.