1. The P/E ratio for a corporation with a stock price of $100 and earnings per share of $20 is:

   	a.	20
   	b.	10
   	c.	5

2. A corporation with a P/E ratio of 21 that is expected to earn $4.04 per share, would have an expected stock price today of:

   	a.	$75.25
   	b.	$84.84
   	c.	$100.00

3. The Price/Earnings multiple (or ratio) is used to determine the price of a share of stock when:

   	a.	The stock is not paying a dividend
   	b.	The stock is priced below the book value of the stock
   	c.	The fundamental price of the stock is higher than the market value of the stock

4. Due to the fact that a firms capital comes from different sources, a firms cost of capital is a:

   	a.	Geometric Average
   	b.	Weighted Average
   	c.	Arithmetic Average