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

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Manager
Joined: 18 Nov 2008
Posts: 114
Last year the price per share of Stock X increased by k [#permalink]

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23 Nov 2008, 05:23
This topic is locked. If you want to discuss this question please re-post it in the respective forum.

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) %
Manager
Joined: 28 Jul 2004
Posts: 135
Location: Melbourne
Schools: Yale SOM, Tuck, Ross, IESE, HEC, Johnson, Booth
Re: what is the shortest way to solve? [#permalink]

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23 Nov 2008, 06:42
atletikos wrote:
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) %

PPS = p , EPS = e ---> PPS/EPS = p/e

this year , PPS = p x (100+k) /100 , EPS = e x (100+m)/100 --> ratio = p/e x (100+k)/(100+m)

which means increase in ratio = p/e[(100+k)/(100+m) -1] = p/e x (k-m)/(100+m)

Which means percent increase = [100(k-m)]/(100+m) ---> (D) is the answer (not the shortest one though)
_________________

kris

Re: what is the shortest way to solve?   [#permalink] 23 Nov 2008, 06:42
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Last year the price per share of Stock X increased by k

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