Qucstion Thrce (a) Explain the relationship between Earnings per share (EPS) and the price/earnings (PE) ratio. Why may the PE ratio be considered important as a stock market indicator (6 marks) (b) Critically comment on the following methods that have been used to account for goodwill. Writing-off the cost of goodwill directly to reserves in the year of acquisition. (6 marks) )Reporting goodwill at cost but checking it annually for impairment (e) Mwekezaji Limited has the following financial instruments in its financial statements for the year ended June 30, 2018. . Bonds of nominal value of Ksh. 14 million acquired on their issue on July 1, 2017 at a discount of Ksh. 600,000 and carrying a coupon rate 0 11%. Mwekezan Limited plans to hold the bonds until their redemption on June 30, 2021 . Financial assets that are held to collect contractual cash flows but would be sold in particular circumstances, perhaps to fund capital expenditure, or because the credit rating of the instrument falls below that required by Mwekezaji Limited's investment policy Required: Advise the directors (in so far as the information permits) on how the bonds should be classified. Support your advice. (8 marks) ITotal: 20 marks