The PE ratio is useful because it measures:O A. how much a stock is expected to earn.O B. how much earnings are going to grow.O C. how much an investor is willing to pay for $1 of earnings.« < Question 4 of 5 > »AMoving to another question will save this response.co search10:14 PM10/18/2021

The answer will be "c" - how much an investor is willing to pay for $1 of earnings.

Answered: The PE ratlð is O A. how much a stock…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Mari is concerned about cash flow returns. She wants to know how much she gets in actual cash payback for every dollar she has invested in a stock. Which ratio should she use to find out what she wants to know? Earnings per share Dividends per share Dividend yield Dividend payout rate Price-to-earnings ratio
Suppose instead that the company is about to pay a dividend of $2.00 per share. You also learn that the company is expected to have net income of $100 million, dividends of $50 million, and total equity of $1.5 billion (and that these relationships are expected to be stable). If the relevant required rate of return is 10%, what is the intrinsic value per share of the company’s stock?
You bought a stock one year ago for $48.32 per share and sold it today for $44.64 per share. It paid a $1.14 per share dividend today. a. What was your realized return? b. How much of the return came from dividend yield and how much came from capital gain?
Suppose you know that a company's stock currently sells for $45.85 per share and the required return on the stock is 6.48 percent. You also know that the total return on the stock is evenly divided between capital gains yield and dividend yield. If it's the company's policy to always maintain a constant growth rate in its dividends, what is the current dividend per share? Answer to two decimals.
You were recently hired by Scheuer Media Inc. to estimate its cost of capital. You obtained the following data: D1 = $1.75; P0 = $115.00; g = 7.00% (constant); and F = 5.00%. What is the cost of equity raised by selling new common stock?
A stock currently pays a $3 dividend out of $9 of earnings (EPS). If earnings (EPS) are expected to be $9+1 next year and you expect the company to continue with the same payout policy, what will next year's dividend be?
Summarize and discuss the implications of the findings for the business or potential business transaction. ------- Kassidy's Kabob House has preferred stock outstanding that pays a dividend of $5 at the end of each year. The preferred sells for $50 a share. What is the stock's required rate of return? Assume the market is in equilibrium with the required return equal to the expected return. The stock's require rate of return is 10%.
Kalil, Inc. (a for-profit college), has the following data: average stock return (market rate of return) is 7%; market risk premium is 5%. and b = 0. What is the firm's cost of equity (k) from retained earnings based on the CAPM? 12
Consider the following security: Brous Metalworks Earnings Per Share, Time = 0 $2.00 Dividend Payout Rate 0.250 Return on Equity 0.150 Market Capitalization Rate 0.125 Required: Using the information in the tables above, please calculate the sustainable growth rate, dividends per share, and intrinsic value per share. Then solve for the present value of growth opportunities. (Use cells A5 to B8 from the given information to complete this question.) Brous Metalworks Sustainable Growth Rate Dividends per share (Next Year) Intrinsic Value No-Growth Value Per Share Present Value of Growth Opportunities (PVGO)
Assume that you are a consultant to Broske Inc., and you have been provided with the following data: the next expected dividend is $0.67; the current market price is $42.50 and the constant growth rate for the dividends is 8.00% Based on the information given what is the cost of equity?
Anle Corporation has a current stock price of $21.99 and is expected to pay a dividend of $1.00 in one year. Its expected stock price right after paying that dividend is $23.92. a. What is Anle's equity cost of capital? b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain? a. What is Anle's equity cost of capital? Anle's equity cost of capital is ☐ %. (Round to two decimal places.)
What is the price of a share today if dividend today (D0) is $5, discount rate (R) 10%, and dividend growth rate (g) 3%. (Explain and show all calculations.)

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The PE ratlð is O A. how much a stock is expected to earn. O B. how much earnings are going to grow. O C. how much an investor is willing to pay for $1 of earnings.