Last year the price per share of Stock X increased by k percent and the earnings per share of Stock X increased by m percent, where k is greater than m. By what percent did the ratio of price per share to earnings per share increase, in terms of k and m?
A. k/m %
B. (k-m) %
C. [100(k-m)]/(100+k) %
D. [100(k-m)]/(100+m) %
E. [100(k-m)]/(100+k+m) %
Old price = p
Old earnings = e
Old PE ratio = p/e
New price = (100+k)p/(100
New earnings = (100+m)e/100
New PE ratio = (100+k)p/(100+m)e
Increase in PE ratio = New PE - Old PE
= (k-m)p/(100+m)e
% increase = increase * 100/earlier PE
= (k-m)100/(100+m)