Zale is a new investor. He studies the financial pages and finds a company whose stock market EPS has risen while its P/E ratio has declined. What should Zale do? a. do not invest in the stock because the price is not keeping up with earnings
b. invest in the stock because the price has increased drastically
c. invest in the stock because earnings are rising while the stock price is not rising
d. do not invest in the stock because earnings are decreasing

The correct option is B) invest in the stock because the price has increased drastically.

Explanation:

Earning per share (EPS) is calculated by dividing net profit over number of outstanding shares. Where as the P/E ratio is calculated by dividing share price over earnings/profits. Decrease in P/E ratio indicates that  company's earnings have improved over its price. Further increase in EPS also suggests rise in earnings. Both formula indicates rise  in earnings which indicates that company is in profits and can easily expect better dividend yield and future growth. So it is high time to invest in the company.

even though you have attached neither the chart nor the generalizations, i have located them online. the right answer is d, since they are asking you about a generalization. you can only infer from the chart that between 2008 and 2009 the number of employed workers decreased significantly (from over 115 millions to 107 millions approximately), which signals some type of economic crisis.  

quote is the answer your looking for.