A firm's earnings per share increased from $10 to $12, its dividends increased from $4 to $4.40, and its share price increased from $80 to $100. Given this information, it follows that _________.
A. the stock experienced a drop in its P/E ratio
B. the company had a decrease in its dividend payout ratio
C. both earnings and share price increased by 20%
D. the required rate of return increased
Answer: B