Series 7 practice questionmediumAnalysis and Valuation 516
A stock selling at $28 with earnings per share of $2 has a price-to-earnings ratio of:
- A2
- B14✓ Correct answer
- C16
- D12
Explanation
Why B — 14
The P/E ratio equals market price per share divided by earnings per share. $28 divided by $2 equals 14.
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