A stock report contains the following information: P/E 21.4,closing price 28.16,dividend 1.10,net chg .06,and an ask of 28.22 × 300.Which one of the following statements is correct given this information?
A)The stock price has increased by 6 percent thus far this year.
B)The closing price on the previous trading day was $28.10.
C)The earnings per share are approximately $2.
D)The dividend yield is 21.4 percent.
E)The bid-ask spread is $.300.

Question

Quizplus · Accepted Answer

The net chg indicates a small increase in the closing price from the previous day (28.16 + 0.06 = 28.22). The ask price of 28.22 × 300 means that someone is offering to sell 300 shares at a price of 28.22 per share. The P/E ratio of 21.4 suggests that the market values the stock at 21.4 times its earnings per share. Using this ratio and the given closing price, we can estimate the earnings per share to be approximately $1.32 (28.16 ÷ 21.4). The dividend yield is calculated by dividing the dividend by the closing price, which gives us 1.10 ÷ 28.16 = 0.039 or 3.9%. Therefore, the correct statement is that the closing price on the previous trading day was $28.10, which cannot be determined directly from the given information but can be inferred from the net chg and closing price.

A Stock Report Contains the Following Information: P/E 21