How Would the Declaration of a Cash Dividend Affect the Calculation

Multiple Choice

How would the declaration of a cash dividend affect the calculation of a company's price-earnings ratio? (Hint: Do not consider any change in the market price of the stock that might occur because of the declaration of the dividend. )

A) It will have no effect on the price-earnings ratio.
B) The effect depends on the market price of the stock at the time the dividend is declared.
C) It will decrease the price-earnings ratio.
D) It will increase the price-earnings ratio.