SIE practice questionmediumP/E Ratio
A company’s P/E ratio is often used by analysts to:
- ASet the dividend yield
- BCompare relative value of different companies✓ Correct answer
- CDetermine share par value
- DCalculate outstanding shares
Explanation
Why B — Compare relative value of different companies
P/E ratio helps analysts compare valuations of different firms. It is not used for dividend yields, par values, or share counts.
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