An investor is considering purchasing one of the following three stocks. Stock X has a...
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Accounting
An investor is considering purchasing one of the following three stocks. Stock X has a market capitalization of
$8
billion, pays a relatively high dividend with little increase in earnings, and has a P/E ratio of
11.
Stock Y has a market capitalization of
$61
billion but does not currently pay a dividend. Stock Y has a P/E ratio of
37.
Stock Z, a housing industry company, has a market capitalization of
$796
million and a P/E of
18.
a. Classify these stocks according to their market capitalizations.
b. Which of the three would you classify as a growth stock? Why?
c. Which stock would be most appropriate for an aggressive investor?
d. Which stock would be most appropriate for someone seeking a combination of safety and earnings?
Question content area bottom
Part 1
a. Stock X is classified as a
small-cap
mid-cap
large-cap
stock.
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