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Last year the price per share of Stock X increased by k

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Last year the price per share of Stock X increased by k [#permalink]

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New post 30 Nov 2008, 07:22
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Last year the price per share of Stock X increased by k percent and the earnings per share of Stock X increased by m percent, where k is greater than m. By what percent did the ratio of price per share to earnings per share increase, in terms of k and m?

A. k/m %
B. (k-m) %
C. [100(k-m)]/(100+k) %
D. [100(k-m)]/(100+m) %
E. [100(k-m)]/(100+k+m) %
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Re: stock X [#permalink]

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New post 30 Nov 2008, 08:52
ratio r = P/E

P'=P(100+k)%
E'=E(100+m)%

r' = P'/E' = r * (100+k) / (100+m)

ratio increase is: (r'-r)/r = (k-m) / (100+m) = 100(k-m) / (100+m) %

answer is D
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New post 30 Nov 2008, 09:07
thanks a lot. make sense
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Re: stock X [#permalink]

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New post 30 Nov 2008, 11:08
i hate these type of questions. can anyone give me a pointer or 2 to some good resource to beef up my skills here?
Re: stock X   [#permalink] 30 Nov 2008, 11:08
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Last year the price per share of Stock X increased by k

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