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Stock/earnings

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Stock/earnings

by Xbond » Sat Dec 19, 2009 9:54 am
Hi there,

How to resolve it in fast and simple way ?

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. k/m %
B. (k - m) %
C. [100(k - m)] / (100 + k) %
D. [100(k - m)] / (100 + m) %
E. [100(k - m)] / (100 + k + m) %

OA is D
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by Xbond » Sat Dec 19, 2009 9:55 am
A. k/m %
B. (k - m) %
C. [100(k - m)] / (100 + k) %
D. [100(k - m)] / (100 + m) %
E. [100(k - m)] / (100 + k + m) %
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by regor60 » Mon Dec 21, 2009 7:21 am
P2= (1+k/100)*P1 > divide k by 100 to express as decimal
E2=(1+m/100)*E1 > " m "

% change in P/E is { [(P2/E2) - (P1/E1)]/(P1/E1)} *100 > multiply by 100 to express decimal as percent

substitute in and answer is 100(k-m)/(100+m)

no other way
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