Which of the Following Statements Regarding the P/E Ratio Is

question 129

Multiple Choice

Which of the following statements regarding the P/E ratio is not true?

• A)The P/E ratio indicates how much investors are willing to pay for a share of a company's stock as a multiple of current earnings.
• B)A high P/E ratio may mean that investors have pushed the price of the stock up in anticipation of higher future net income.
• C)If EPS decreases and there is no change in the market price of the stock,the P/E ratio will decrease.
• D)If the market price of the stock increases and there is no change in EPS,the P/E ratio will increase.