If the Market Multiple Is 23

question 34

Multiple Choice

If the market multiple is 23.0 and the P/E ratio of a company is 27.4, then the share's relative P/E is

• A) 3.21.
• B) 4.40.
• C) 1.19.
• D) 0.84.

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Definitions:

Absolute Value

A mathematical term describing the magnitude of a number regardless of its sign; the distance of a number from zero on the number line.

Indeterminate

A situation or problem that cannot be resolved due to insufficient or conflicting information.

Price Of Capital

The cost of using capital goods, reflected in interest rates or rental prices of equipment and machinery.

Price Of Labor

The wage rate or compensation paid to workers for their labor, determined by factors such as skill level, supply and demand, and industry standards.