An investor is considering purchasing one of the following three stocks. Stock X has a market capitalization of $6 billion, pays a relatively high dividend with little increase in earnings, and has a P/E ratio of 12. Stock Y has a market capitalization of $65 billion but does not currently pay a dividend. Stock Y has a PE ratio of 38. Stock Z, a housing industry company, has a market capitalization of $795 million and a P/E of 19.

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?