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**CFA Practice Question**

If the earnings per share on the S&P 500 index increases by 16% and the earnings multiplier decreases by 9%, the index will experience a change of:

A. 16%

B. 26.44%

C. 5.56%

**Explanation:**The index value = earnings multiplier * earnings per share. Therefore, the change in index value equals 1.16 * 0.91 -1 = 5.56%

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**User Contributed Comments**
1

User |
Comment |
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smettias |
0.91? |