Question

A stock listing contains the following information:

P/E 17.5, closing price 33.10, dividend .80, YTD% chg 3.4, and net chg of -.50. Which of the following statements are correct given this information?


I. The stock price has increased by 3.4% during the current year.
II. The closing price on the previous trading day was $32.60.
III. The earnings per share are approximately $1.89.
IV. The current yield is 17.5%.
A. I and II only
B. I and III only
C. II and III only
D. III and IV only
E. I, III, and IV only

Provide excel calculation.

Answer 1

Answer:

The correct option is B, I  and III only

Explanation:

The earnings per share can be computed from the P/E ratio pf 17.5

P/E=Price of stock/earnings per share

price of stock  is $33.10

P/E ratio is 17.5

earnings per share is unknown

17.5=33.10/EPS

EPS=33.10/17.5

EPS =1.89

YTD of 3.4% implies that the stock price has grown by 3.4 % in the course of the year.

The previous day closing stock price  of $32.60 cannot be substantiated as more details are required.

Current dividend yield =dividend per share/current stock price

                                       =$0.80/$33.10

                                        =2.4%

The correct option is B,as the first and third comments were correct