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
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
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a If EPS increases by 10 from 200 to 220 and the PE remains the same the new Share Price P would be ...Get Instant Access with AI-Powered Solutions
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Using And Interpreting Statistics
Authors: Eric W. Corty
2nd Edition
1429278609, 978-1429278607
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