Now consider Target$$s market value ratios. That is$,$ how does the company$$s financial condition and performance relate to the observed market price of the company$$s shares? $($Note: Round intermediate calculations to two decimal places.$)$

Target Corporation

Market Value Ratios

Book value per share

$2010$

$

$2009$

$

$2008$

$

EPS

$2010$

$

$2009$

$

$2008$

$

P$/$E ratio

$2010$

$2009$

$2008$

M$/$B ratio

$2010$

$2009$

$2008$

$1.$ From $2008$ through $2010,$ Target$$s market capitalization increased. Specifically, it increased from $$23,484,628,877$ to $$38,177,921,157$ between $2008$ and $2009$ and to $$38,264,477,148$ in $2010.$ Which of the following statements are correct? Check all that apply.

During the periods $2008$ to $2009$ and $2009$ to $2010,$ the number of common shares outstanding decreased by $1\mathrm{.}07\%$ and $5\mathrm{.}45\%,$ respectively.

During the periods $2008$ to $2009$ and $2009$ to $2010,$ the market price of Target$$s common shares increased by $64\mathrm{.}33\%$ and $6\mathrm{.}01\%,$ respectively.

During the periods $2008$ to $2009$ and $2009$ to $2010,$ the positive pressure from the increasing market prices was greater, or stronger, than the offsetting, or negative, pressure from the decreased number of shares outstanding.

During the periods $2008$ to $2009$ and $2009$ to $2010,$ the market price of Target$$s common shares increased by $39\mathrm{.}15\%$ and $5\mathrm{.}67\%,$ respectively.

These changes in the company$$s market capitalization should be construed as news and should be investigated further. One reasonable question that should be asked is: For what reason were the shares, or approximately $6\mathrm{.}47\%$ of $2008$s outstanding shares, repurchased during the period $2008$ through $2010?$ Was it part of earlier planned program, or were they repurchased to reduce the supply of shares available in the equity market and thereby the market price of the shares? $($Note: The answer to this question can be found, in part, by reading the company$$s annual reports.$)$

$2.$ Similarly, from $2008$ through $2010,$ the company$$s book value from year to year. In general, and assuming that everything else remains constant, this behavior should have tended to the company$$s market$-$to$-$book $($M$/$B$)$ ratio. However, over time, Target$$s M$/$B ratio had increased, which suggests that the percentage increase in the market price had been than the percentage increase in the company$$s book value.

Because the denominator of both the market price per share and the book value per share ratios is the number of shares outstanding, the trend of the M$/$B ratio indicates which of the following?

The market placed an increasing value on the portion of the company owned by the creditors and debtholders.

The market placed an increasing value on the portion of the company owned by the common shareholders.

The market placed a decreasing value on the portion of the company owned by the common shareholders.

$3.$ Target$$s earnings per share $($EPS$)$ ratio, which is calculated by dividing its by the number of common shares outstanding, exhibited a consistently increasing trend, growing by between $2008$ and $2009$ and by between $2009$ and $2010.$

$4.$ From $2008$ through $2010,$ Target$$s price$-$to$-$earnings $($P$/$E$)$ ratio exhibited an inconsistent trend. Which of the following phenomena contributed to this pattern? Check all that apply.

Between $2008$ and $2009,$ Target$$s EPS increased by a greater percentage than the market price of its common shares.

Between $2009$ and $2010,$ Target$$s EPS increased by a greater percentage than the market price of its common shares.

Between $2009$ and $2010,$ the market price per share of Target$$s common stock increased by a greater percentage than that exhibited by its EPS.