Response to the following problem:
The following information relates to three companies in the same industry:
|
|
Latest
|
Earnings
|
Dividends
|
|
Company
|
market price
|
per share
|
per share
|
|
A
|
$35
|
$11
|
$-0-
|
|
B
|
40
|
5
|
4
|
|
C
|
90
|
10
|
6
|
Required: Explain and calculate the price-earnings and dividend yield ratios. On the basis of only the foregoing information, which company represents the most attractive investment opportunity to you? Explain.