In making your investment decisions, you apply both DCF technique and market P/E multiple approach. There is this company, RST Inc. and you have decided to use the P/E approach to value this stock. You have estimated that RST's earnings should come in at about $5.50 per share next year. In addition, although this stock normally trades at a relative P/E of 2 times the market P/E ratio, you believe that the relative P/E to market should rise to 3.3, whereas the market (forward) P/E should be around 15 times earnings. What is the maximum price you would be willing to pay for the stock according to the P/E approach? Briefly discuss the rationale behind the P/E approach. After a careful fundamental analysis, you have discovered an undervalued stock, which is currently selling at $60 per share. You have $6,000 to invest. The possible investment strategies for you are either to buy the stock or buy the stock call option, which is trading at $6 per share (the option premium) and with a strike price of $65. Compare these two strategies by computing their % rates of return under the two scenarios: the stock price at call option expiration is 1) $75 and 2) $40