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Last year the price per share of Stock X increased by k perc
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19 May 2020, 09:05
19 May 2020, 09:05
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Last year the price per share of Stock X increased by k percent and the earnings per share of Stock X increased by m percent, where k is greater than m. By what percent did the ratio of price per share to earnings per share increase, in terms of k and m?
A. \(\frac{k}{m} %\)
B. \((k – m) %\)
C. \(\frac{100(k – m)}{(100 + k)} %\)
D. \(\frac{100(k – m)}{(100 + m)} %\)
E. \(\frac{100(k – m)}{(100 + k + m)} %\)
A. \(\frac{k}{m} %\)
B. \((k – m) %\)
C. \(\frac{100(k – m)}{(100 + k)} %\)
D. \(\frac{100(k – m)}{(100 + m)} %\)
E. \(\frac{100(k – m)}{(100 + k + m)} %\)
Re: Last year the price per share of Stock X increased by k perc
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22 Mar 2021, 16:13
22 Mar 2021, 16:13
1
#Last year:
Price -> p
Earnings -> e
number of shares -> s
Price per share = p/s
Earning per share = e/s
Price per share / Earning Per share = p/s *s/e = p/e
#This year
Price per share = p/s * (100 + k ) /100
Earnings per share = e/s * (100 + m ) /100
Price per share / Earning Per share = (p/s * (100 + k ) /100) / (e/s * (100 + m ) /100)
= p/e (100+k) / (100+m)
This year's ratio - Last year's ratio
p/e (100+k) / (100+m) - p/e
p/e * ( (100+k) / (100+m) - 1 ) = p/e * ( (100+k) / (100+m) - ((100+m) /(100+m) ) )
= p/e * (100+k - 100-m ) / (100+m) = p/e * ( k-m ) / (100 + m)
Again, Last years ratio is p/e, so increased ratio from last year to this year is (k-m) / (100+m)
Please note that answer which is asked is percent , so we need to multiply 100 to convert ratio to percent, so the answer is
100 * (k-m) / (100+m)
Answer is D:
Price -> p
Earnings -> e
number of shares -> s
Price per share = p/s
Earning per share = e/s
Price per share / Earning Per share = p/s *s/e = p/e
#This year
Price per share = p/s * (100 + k ) /100
Earnings per share = e/s * (100 + m ) /100
Price per share / Earning Per share = (p/s * (100 + k ) /100) / (e/s * (100 + m ) /100)
= p/e (100+k) / (100+m)
This year's ratio - Last year's ratio
p/e (100+k) / (100+m) - p/e
p/e * ( (100+k) / (100+m) - 1 ) = p/e * ( (100+k) / (100+m) - ((100+m) /(100+m) ) )
= p/e * (100+k - 100-m ) / (100+m) = p/e * ( k-m ) / (100 + m)
Again, Last years ratio is p/e, so increased ratio from last year to this year is (k-m) / (100+m)
Please note that answer which is asked is percent , so we need to multiply 100 to convert ratio to percent, so the answer is
100 * (k-m) / (100+m)
Answer is D:
General Discussion
Re: Last year the price per share of Stock X increased by k perc
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19 May 2020, 09:05
19 May 2020, 09:05
Expert Reply
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