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Series 7: Investment Information & Recommendations
Series 7 practice questionmediumAnalysis and Valuation 496

A stock selling at $20 with earnings per share of $2 has a price-to-earnings ratio of:

  1. A2
  2. B10✓ Correct answer
  3. C12
  4. D8
Explanation

Why B10

The P/E ratio equals market price per share divided by earnings per share. $20 divided by $2 equals 10.

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