1. You have two stocks from which to pick. The first stock has a current stock price of $40 and earnings per share of $3.33. The second stock has a current stock price of $33.50 and earnings per share...

1. You have two stocks from which to pick. The first stock has a current stock price of $40 and earnings per share of $3.33. The second stock has a current stock price of $33.50 and earnings per share of $4.01. Both firms are in the media industry, and the average P/E ratio for the industry is 12. Use the P/E ratio to determine which stock you expect to have higher earnings.