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# The stock price of companies that have high earnings per share growth

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The stock price of companies that have high earnings per share growth  [#permalink]

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15 Jan 2018, 04:29
00:00

Difficulty:

65% (hard)

Question Stats:

50% (01:28) correct 50% (01:30) wrong based on 42 sessions

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The stock price of companies that have high earnings per share growth increases fast. Because CEO compensation is tied to the increase in stock price, many companies use cash from operations to buy back shares to increase the overall earnings per share. However, in practice, this strategy is often counterproductive as this leaves little cash to be invested in developing new products and services. In the long run this reduces the overall earnings per share and the stock price.

In the passage above, the two boldfaced portions play the following roles:
A The first is a reason to pursue a certain strategy to achieve an aim, the second is that strategy.
B The first is a consideration raised to support a certain strategy that may be counter- productive; the second is a strategy that can help mitigate the consideration.
C The first is a reason to pursue a certain strategy to achieve an goal; the second is that goal
D The first is inferred from the opening line of the passage while the second is the key to achieving the first
E The first is a consideration that is used to justify adopting a certain strategy, the second presents the intended outcome of that strategy.

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Re: The stock price of companies that have high earnings per share growth  [#permalink]

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15 Jan 2018, 05:11
A The first is a reason to pursue a certain strategy to achieve an aim, the second is that strategy. - Correct.

B The first is a consideration raised to support a certain strategy that may be counter-productive; the second is a strategy that can help mitigate the consideration. - Second BF is a strategy that is not used to mitigate the consideration

C The first is a reason to pursue a certain strategy to achieve an goal; the second is that goal - Second BF is not a goal.

D The first is inferred from the opening line of the passage while the second is the key to achieving the first - First BF cannot be inferred from the opening line of the argument.

E The first is a consideration that is used to justify adopting a certain strategy, the second presents the intended outcome of that strategy. - Second BF is not an outcome of the strategy.

Answer: A

--== Message from the GMAT Club Team ==--

THERE IS LIKELY A BETTER DISCUSSION OF THIS EXACT QUESTION.
This discussion does not meet community quality standards. It has been retired.

If you would like to discuss this question please re-post it in the respective forum. Thank you!

To review the GMAT Club's Forums Posting Guidelines, please follow these links: Quantitative | Verbal Please note - we may remove posts that do not follow our posting guidelines. Thank you.
Re: The stock price of companies that have high earnings per share growth &nbs [#permalink] 15 Jan 2018, 05:11
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# The stock price of companies that have high earnings per share growth

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