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    Question

    If the same company's stock price fell to $2 per share while its EPS fell to $0.25, the P/E would fall to ____.

    A 5 Correct Answer Incorrect Answer
    B 6 Correct Answer Incorrect Answer
    C 7 Correct Answer Incorrect Answer
    D 8 Correct Answer Incorrect Answer
    E 9 Correct Answer Incorrect Answer

    Solution

    It's important to note that a lower P/E can also be a sign of trouble. If the same company's stock price fell to $2 per share while its EPS fell to $0.25, the P/E would fall to 8 = ($2/0.25). 

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