Which One of the Following Statements Related to the Price-Earnings

question 5

Multiple Choice

Which one of the following statements related to the price-earnings (P/E) ratio is correct?

• A)The earnings yield is the inverse of the P/E ratio.
• B)The P/E ratio is equal to the market price per share divided by total net income.
• C)The P/E ratio shown in The Wall Street Journal is based on next year's estimated earnings per share.
• D)The P/E ratio varies directly with earnings per share.
• E)The earnings for the past twelve months is the method analysts prefer for computing earnings for the P/E ratio.

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Definitions:

Circadian Rhythm

A natural, internal process that regulates the sleep-wake cycle and repeats roughly every 24 hours, affecting physical, mental, and behavioral changes in living organisms.

Pineal Gland

A small, pine-cone-shaped endocrine gland in the brain that produces and secretes the hormone melatonin, which regulates sleep patterns.

Hypothalamus

A region of the brain below the thalamus that coordinates both the autonomic nervous system and the activity of the pituitary, controlling body temperature, thirst, hunger, and other homeostatic systems.

REM Sleep

A phase of sleep characterized by rapid eye movements, vivid dreaming, and increased brain activity.