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9 September, 07:15

Zale is a new investor. He studies the financial pages and finds a company whose stock market EPS has risen while its P/E ratio has declined. What should Zale do? a. do not invest in the stock because the price is not keeping up with earnings

b. invest in the stock because the price has increased drastically

c. invest in the stock because earnings are rising while the stock price is not rising

d. do not invest in the stock because earnings are decreasing

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  1. 9 September, 07:23
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    EPS stands for Earnings Per Share. The EPS serves as the measure whether the company has been gaining profit. P/E ratio stands for Price-Earnings ratio. This is the market value of the earnings over its market price per share. Based on these results above, what Zale should do is that, he should invest in the stock because of the drastic increase in price. Answer is B.
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