The Common Stock of Securetech Corporation Consistently Sells at a Market

Multiple Choice

The common stock of Securetech Corporation consistently sells at a market price of 20 times earnings .What would be the most likely effect of a 10 cent increase in Securetech's basic EPS?

A) An increase in market price of approximately 10 cents per share.
B) An increase in market price of approximately $2 per share.
C) A reduction in the p/e ratio due to the larger EPS.
D) Nothing,since market price reflects expectations of future earnings.