By what factor will earnings per share will have to change for a 5% change in earnings multiplier to induce a change of 9% in the price of the stock?
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A. B. C. D.D
Stock price = earnings multiplier * earnings per share. Therefore, the earnings multiplier will have to increase by 1.09/1.05 - 1 = 3.81%.
To determine the factor by which earnings per share (EPS