Series 7 - General Securities Representative Exam

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Unit 1 Unit 2 Unit 3 Unit 4

XYZ company common stock is trading at $88 per share. Earnings per share is $8.00. XYZ then announces a 2:1 stock split. Which TWO of the following are TRUE AFTER the split occurs?

The P/E ratio is 10, The EPS decreases to $4

A

The P/E ratio is 10, The EPS stays at $8

B

The P/E ratio is 5, The EPS stays at $8

C

The P/E ratio is 5, The EPS decreases to $4

D