5. An investor is considering purchasing one of the following three stocks. Stock X

has a market capitalization of $7 billion, pays a relatively high dividend with

little increase in earnings, and has a P/E ratio of 11. Stock Y has a market capitalization

of $62 billion but does not currently pay a dividend. Stock Y has a P/E

ratio of 39. Stock Z, a housing industry company, has a market capitalization of

$800 million and a P/E of 18.

a. Classify these stocks according to their market capitalizations.

b. Which of the three would you classify as a growth stock? Why?

c. Which stock would be most appropriate for an aggressive investor?

d. Which stock would be most appropriate for someone seeking a combination

of safety and earnings?