Question

The closing price of a stock is quoted at 32.08, with a P/E of 21 and a net change of 36. Based on this information, which one of the following statements is correct?

a. The current earnings per share equal $32.08/21 + $36.
b. The earnings per share have increased by $.36 this year.
c. The current stock price is equivalent to 21 years of the firm's current earnings per share.
d. The closing price on the previous day was $.36 higher than today's closing price.
e. A dealer will buy the stock at $32.08 and sell it at $32.44 a share.

Answer 1

c. The current stock price is equivalent to 21 years of the firm's current earnings per share

Step-by-step explanation:

PE ratio = market price/EPS

market price = EPS*PE ratio

= EPS*21

Therefore, The current stock price is equivalent to 21 years of the firm's current earnings per share