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SIE: Equity Securities
SIE practice questionmediumP/E Ratio

A company’s stock trades at $40, and earnings per share are $2. What is its P/E ratio?

  1. A0.05
  2. B2
  3. C80
  4. D20✓ Correct answer
Explanation

Why D20

P/E = $40/$2 = 20. The other choices are incorrect calculations.

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