Earnings Yield Is the Reciprocal of the Price-To-Earnings Ratio

question 51

True/False

Earnings yield is the reciprocal of the price-to-earnings ratio.

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Definitions:

Annual Dividend

The total dividend payment a company makes to its shareholders in a year, often derived from its net income.

Growth Rate

The rate at which a company's earnings, revenue, or other financial metric increases on a year-to-year basis.

Zero Growth Stock

Zero growth stock refers to shares in a company that is expected to experience neither growth nor decline in its dividends or earnings in the foreseeable future.

Required Rate

The minimum return an investor is willing to accept when investing in a project, taking into account the risk level of the investment.