A Price Earnings Ratio of 14 Means That

Multiple Choice

A price earnings ratio of 14 means that:

A) Stockholders are currently paying a price equal to 14 times earnings per share when they buy one share of stock.
B) The market value of each share of outstanding common stock is currently valued at $14 per share.
C) The market-to-book ratio must be equal to 4.
D) The current selling price of a product is equal to 14 times the net income generated from the sale of that product.
E) The market value of the common stock is currently equal to 14 times the book value per share.