A firm wih earning per share of $5 and a price-earning ratio of 15 will have a stock price of?

0 ⤊

A firm wih earning per share of $5 and a price-earning ratio of 15 will have a stock price of?

A- $20.00
B- $75.00
C- $3.00
D- the market assign a stock price independant of EPS and the P/E ratio.

2007-02-09 02:53:10 · 2 answers · asked by youthebest 2 in Business & Finance ➔ Other - Business & Finance

2 answers

PE Ratios vary as the price of the stock moves, but will generally stay within a resonable range that varies by industry. The Stock with an EPS of $5 and a PE of 15 would be selling at or near $75.00 Answer B FINAL ANSWER

2007-02-09 02:59:04 · answer #1 · answered by hdsok 2 · 0⤊ 0⤋

The P/E Ratio is calculated by dividing the Price by the earnings.

Price/Earnings= ratio
thus...

$75/$5= 15

All things being equal, the answer to this question is B- $75.00

2007-02-09 02:59:53 · answer #2 · answered by Santa Barbara 7 · 0⤊ 0⤋