Under the P/E model,stock price is a product of:
A)EPS and DPS
B)P/E ratio and EPS
C)EPS and required return
D)P/E ratio and required return

Question

Quizplus · Accepted Answer

The P/E model (Price/Earnings ratio model) states that the stock price is a product of the P/E ratio (price-earnings ratio) and EPS (earnings per share). The P/E ratio is the price of the stock divided by its EPS. Therefore, the correct answer is B, which states that the stock price is a product of P/E ratio and EPS. The other options are incorrect as they do not follow the P/E model.

Under the P/E Model,stock Price Is a Product Of