37. The results of you computing the P/E ratio of a company give you a value of 22.5.

What does
that mean? 
a. Investors are paying $22.50 for each dollar of earnings that year
b. Each share of stock should be worth $22.50
c. The company's profit margin is 22.5% higher than it was last year
d. The company's profit margin is 22.5%

17. Grab a calculator and let's use the CAPM. If the risk-free rate (as reflected by Company X
returns) is 0.10, the average market return (as indicated by the 1-year return on Company Z) is
20.63, and Pear Products has a beta coefficient of 0.74, the appropriate required return for Pear
Products (rounded to two decimal places) is: 

e. a. 15.37%
f. b. 20.70%
g. c. 15.29%
h. d. 20.60%

18. If an asset costs $40,000 and over 5 years generates $20,000 in profits, what is the ARR? 
a. 20%
b. 10%
c. 100%
d. 50%

13.Tom deposits $2,000 into an account with an interest rate of 2.5% that is compounded
quarterly. Rounding to the nearest dollar, what is the balance in Tom's account after 5 years? 

a) $2,265

b) $3,277

c) $2,050

d) $2,833