PE ratio of the stock is 19 and its earnings per share is $3.70. Price to earnings ratio (P/E ratio) or earnings multiplier is another form of valuing a company. It is a relative way of analyzing the value of a stock. P/E ratio is calculated by dividing the current market price of the stock by its earnings per share. Higher P/E ratio indicates that investors are willing to pay more for each dollar of earnings and vice-versa. P/E ratio tells us how long it will take for the investors to recover its investment. A high P/E ratio means it will take longer to recover their amount invested and a low P/E ratio means tat the investment will be recovered faster. Therefore, it is a measure of the payback period of the investment. Moreover, a company with low PE is undervalued and with market correction, the stock price is expected to rise in the future. Similarly, for a very high P/E stocks, price might fall with the market correction, as it is overvalued. P E = Current Price Earnings per share

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Answer 1

Question

Chapter 7, Problem 17PROB

Summary Introduction

PE ratio of the stock is 19 and its earnings per share is $3.70.

Price to earnings ratio (P/E ratio) or earnings multiplier is another form of valuing a company. It is a relative way of analyzing the value of a stock. P/E ratio is calculated by dividing the current market price of the stock by its earnings per share. Higher P/E ratio indicates that investors are willing to pay more for each dollar of earnings and vice-versa. P/E ratio tells us how long it will take for the investors to recover its investment. A high P/E ratio means it will take longer to recover their amount invested and a low P/E ratio means tat the investment will be recovered faster. Therefore, it is a measure of the payback period of the investment. Moreover, a company with low PE is undervalued and with market correction, the stock price is expected to rise in the future. Similarly, for a very high P/E stocks, price might fall with the market correction, as it is overvalued.

PE=Current PriceEarnings per share

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Answer 2

Question

Chapter 7, Problem 17PROB

Summary Introduction

PE ratio of the stock is 19 and its earnings per share is $3.70.

Price to earnings ratio (P/E ratio) or earnings multiplier is another form of valuing a company. It is a relative way of analyzing the value of a stock. P/E ratio is calculated by dividing the current market price of the stock by its earnings per share. Higher P/E ratio indicates that investors are willing to pay more for each dollar of earnings and vice-versa. P/E ratio tells us how long it will take for the investors to recover its investment. A high P/E ratio means it will take longer to recover their amount invested and a low P/E ratio means tat the investment will be recovered faster. Therefore, it is a measure of the payback period of the investment. Moreover, a company with low PE is undervalued and with market correction, the stock price is expected to rise in the future. Similarly, for a very high P/E stocks, price might fall with the market correction, as it is overvalued.

PE=Current PriceEarnings per share

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Answer 3

Question

Chapter 7, Problem 17PROB

Summary Introduction

PE ratio of the stock is 19 and its earnings per share is $3.70.

Price to earnings ratio (P/E ratio) or earnings multiplier is another form of valuing a company. It is a relative way of analyzing the value of a stock. P/E ratio is calculated by dividing the current market price of the stock by its earnings per share. Higher P/E ratio indicates that investors are willing to pay more for each dollar of earnings and vice-versa. P/E ratio tells us how long it will take for the investors to recover its investment. A high P/E ratio means it will take longer to recover their amount invested and a low P/E ratio means tat the investment will be recovered faster. Therefore, it is a measure of the payback period of the investment. Moreover, a company with low PE is undervalued and with market correction, the stock price is expected to rise in the future. Similarly, for a very high P/E stocks, price might fall with the market correction, as it is overvalued.

PE=Current PriceEarnings per share

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Answer 4

Question

Chapter 7, Problem 17PROB

Summary Introduction

PE ratio of the stock is 19 and its earnings per share is $3.70.

Price to earnings ratio (P/E ratio) or earnings multiplier is another form of valuing a company. It is a relative way of analyzing the value of a stock. P/E ratio is calculated by dividing the current market price of the stock by its earnings per share. Higher P/E ratio indicates that investors are willing to pay more for each dollar of earnings and vice-versa. P/E ratio tells us how long it will take for the investors to recover its investment. A high P/E ratio means it will take longer to recover their amount invested and a low P/E ratio means tat the investment will be recovered faster. Therefore, it is a measure of the payback period of the investment. Moreover, a company with low PE is undervalued and with market correction, the stock price is expected to rise in the future. Similarly, for a very high P/E stocks, price might fall with the market correction, as it is overvalued.

PE=Current PriceEarnings per share

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Answer 5

Chapter 7, Problem 17PROB

Summary Introduction

PE ratio of the stock is 19 and its earnings per share is $3.70.

Price to earnings ratio (P/E ratio) or earnings multiplier is another form of valuing a company. It is a relative way of analyzing the value of a stock. P/E ratio is calculated by dividing the current market price of the stock by its earnings per share. Higher P/E ratio indicates that investors are willing to pay more for each dollar of earnings and vice-versa. P/E ratio tells us how long it will take for the investors to recover its investment. A high P/E ratio means it will take longer to recover their amount invested and a low P/E ratio means tat the investment will be recovered faster. Therefore, it is a measure of the payback period of the investment. Moreover, a company with low PE is undervalued and with market correction, the stock price is expected to rise in the future. Similarly, for a very high P/E stocks, price might fall with the market correction, as it is overvalued.

PE=Current PriceEarnings per share

Answer 6

Chapter 7, Problem 17PROB

Summary Introduction

PE ratio of the stock is 19 and its earnings per share is $3.70.

Price to earnings ratio (P/E ratio) or earnings multiplier is another form of valuing a company. It is a relative way of analyzing the value of a stock. P/E ratio is calculated by dividing the current market price of the stock by its earnings per share. Higher P/E ratio indicates that investors are willing to pay more for each dollar of earnings and vice-versa. P/E ratio tells us how long it will take for the investors to recover its investment. A high P/E ratio means it will take longer to recover their amount invested and a low P/E ratio means tat the investment will be recovered faster. Therefore, it is a measure of the payback period of the investment. Moreover, a company with low PE is undervalued and with market correction, the stock price is expected to rise in the future. Similarly, for a very high P/E stocks, price might fall with the market correction, as it is overvalued.

PE=Current PriceEarnings per share

Answer 7

Chapter 7, Problem 17PROB

Summary Introduction

PE ratio of the stock is 19 and its earnings per share is $3.70.

Price to earnings ratio (P/E ratio) or earnings multiplier is another form of valuing a company. It is a relative way of analyzing the value of a stock. P/E ratio is calculated by dividing the current market price of the stock by its earnings per share. Higher P/E ratio indicates that investors are willing to pay more for each dollar of earnings and vice-versa. P/E ratio tells us how long it will take for the investors to recover its investment. A high P/E ratio means it will take longer to recover their amount invested and a low P/E ratio means tat the investment will be recovered faster. Therefore, it is a measure of the payback period of the investment. Moreover, a company with low PE is undervalued and with market correction, the stock price is expected to rise in the future. Similarly, for a very high P/E stocks, price might fall with the market correction, as it is overvalued.

PE=Current PriceEarnings per share

Answer 8

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Answer 11

Ch. 7 - Prob. 1PROB Ch. 7 - Prob. 2PROB Ch. 7 - Prob. 3PROB Ch. 7 - Prob. 4PROB Ch. 7 - Prob. 5PROB Ch. 7 - Prob. 6PROB Ch. 7 - Prob. 7PROB Ch. 7 - Prob. 8PROB Ch. 7 - Prob. 9PROB Ch. 7 - Prob. 10PROB

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