2A2S THE FOLLOWING INFORMATION CONCERNING ARNOLD COMPANY’S COMMON STO...

71.

CSO: 2A2e

LOS: 2A2s

The following information concerning Arnold Company’s common stock was included in

the company’s financial reports for the last two years.

Year 2

Year 1

Market price per share on December 31

$60

$50

Par value per share

10

10

Earnings per share

3

3

Dividends per share

1

1

Book value per share on December 31

36

34

Based on the price-earnings information, investors would most likely consider Arnold’s

common stock to

a.

be overvalued at the end of Year 2.

b.

indicate inferior investment decisions by management in Year 2.

c.

show a positive trend in growth opportunities in Year 2 compared to Year 1.

d.

show a decline in growth opportunities in Year 2 compared to Year 1.