The earnings-to-price ratio for the S&P 500 stocks declined significantly from the late 1970s to the late

Question:

The earnings-to-price ratio for the S&P 500 declined significantly from the late 1970s to the late 1990s. As this ratio is a "return" per dollar of price, some claimed that the decline indicated that the required return for equity investing had declined, and they attributed the increase in stock prices over the period to the decline in the required return. Why is this reasoning suspect?

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...