Which of the Following Statements About the Price/Earnings Ratio Is

question 155

Multiple Choice

Which of the following statements about the Price/Earnings ratio is not correct?

• A)The Price/Earnings 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 Price/Earnings 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 Price/Earnings ratio will decrease.
• D)If the market price of the stock increases and there is no change in EPS,the Price/Earnings ratio will increase.

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