The closing price of a stock is quoted at 32.08,with a PE of 21 and a net change of .36.Based on this information,which one of the following statements is correct?
A)The closing price on the previous day was $.36 higher than today's closing price.
B)A dealer will buy the stock at $32.08 and sell it at $32.44 a share.
C)The current earnings per share equal $32.08/21 + $.36.
D)The current stock price is equivalent to 21 years of the firm's current earnings per share.
E)The earnings per share have increased by $.36 this year.

Question

Quizplus · Accepted Answer

The price-to-earnings (PE) ratio is calculated by dividing the market value per share by the earnings per share (EPS). A PE of 21 means that the current stock price is 21 times the earnings per share, indicating that the stock price represents 21 years of earnings at the current rate, not accounting for any growth or decline in earnings.

The Closing Price of a Stock Is Quoted at 32