Suppose the earnings per share (EPS) of a stock is $2, and the current price/earnings (P/E) ratio is 10. What is the current price of the stock?
A) $5
B) $8
C) $20
D) $40
E) $35

Name: Suppose the earnings per share (EPS) of a stock is $2, and the current price/earnings (P/E) ratio is 10. What is the current price of the stock? A) $5 B) $8 C) $20 D) $40 E) $35
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Question

Quizplus · Accepted Answer

P/E ratio = Price/Earnings per share
10 = Price/2
Price = 10*2 = $20

Suppose the Earnings Per Share (EPS) of a Stock Is