SIE practice questionmediumP/E Ratio
A company's price-to-earnings (P/E) ratio provides investors with an indication of:
- AHow much investors are willing to pay for each dollar of earnings✓ Correct answer
- BThe dividend paid per share annually
- CThe book value of the company per share
- DThe company's bond rating
Explanation
Why A — How much investors are willing to pay for each dollar of earnings
The P/E ratio measures market price relative to earnings per share, indicating investor sentiment. It does not relate to dividends, book value, or bond ratings.
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