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:
- A2
- B10✓ Correct answer
- C12
- D8
Explanation
Why B — 10
The P/E ratio equals market price per share divided by earnings per share. $20 divided by $2 equals 10.
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