22. If the PE of a broad market index is below the historical average PE, an investor might expect:

a. the earnings yield ratio to increase in the future.

b. the value of stocks in the index to decrease in the future.

c. the PE s of the index to fall in the future.

d. the earnings/price ratio to decrease in the future as stock values increase.

21. The earnings yield is the:

a. reciprocal of the P/E ratio.

b. expected return on the present assets of the company.

c. assumes no earnings growth and a 100% payout ratio.

d. all of the above are correct.