Given that the Share Price is equal to the product of the Earnings per Share and the

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Question:

Given that the Share Price is equal to the product of the Earnings per Share and the Price- Earnings Ratio or 'Multiple', P = EPS x PE, where P = $50 and EPS = $2.00

a. Detail the effect that a 10% change in Earnings per Share (EPS) and a 10% change in the Price-Earnings Ratio (PE) might have on the Share-Price (P).

b. For a short-biased investor which scenario is ideal and why?

c. What type of stock does this resemble and why?

d. Assuming a fifteen percent rise in EURUSD over the same timeframe calculate the equivalent return in Euro when there is an increase in earnings and multiple expansion