Last year the price per share of Stock X increased by k percent and the earnings per share of Stock X increased by m percent, where k is greater than m.By what percent did the ratio of price per share to earnings per share increase, in terms of k and m?
Suppose the orginal price last year was 1 $ per share, then the current price is (1+k%) $. Similary, we assume previous earings was A $ per share, while the current earning is A(1+m%) $. It is easy to compute the tow /E ratio are 1/A and (1+k)/A(1+m) respectively.