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Queen City Sausage stock is selling at $40 per share, it has retained earnings of $1.00 per share, and dividends of $1.00 per
The country of Cedarland does not trade with any other country. Its GDP is $17 billion. Its government purchases $5 billion w
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Answer #1

1) Price - Earning ratio is used to determine a stock's valuation. The P/E ratio shows whether the company's stock is undervalued or overvalued and tells how much market is willing to pay today based on past or future earnings

price per share is determined by the demand and supply of the shares in the prevailing market.

Earning per share determines the financial strength of the company. It is the amount earned per share after all the profits were paid out to its shareholders. It is calculated as Earnings/Total outstanding shares. P/E can be calculated only if earnings are positive.

P/E in this case is 40/1 = 40

2) To calculate the dividend yield = DIVIDEND PER SHARE / PRICE PER SHARE

= 1 / 40 = 0.025 = 2.5%

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