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The common stock of Securetech Corporation consistently sells at a market price of 20 times earnings (i.e., at a p/e ratio of 20). What would
The common stock of Securetech Corporation consistently sells at a market price of 20 times earnings (i.e., at a p/e ratio of 20). What would be the most likely effect of a 10 cent increase in Securetech basic EPS, assuming the price adjusts to keep the ratio in tact? An increase in market price of approximately 10 cents per share. An increase in market price of approximately $2 per share. A reduction in the p/e ratio due to the larger EPS. Nothing, since market price reflects expectations of future earnings
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