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Question
An oil company's P/E ratio is 15; its projected EPS is $8; and its price is $120. Expectations are that a new field will add $2 EPS the next year. If the P/E remains constant, what should happen to the price in an efficient market? How soon? Are investors that pay the price after adjustment paying a fair price and are they expected to earn a normal return?Answer
This answer is hidden. It contains 133 characters.
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