Which Financial Indicator Is Calculated by the Ratio of Market

question 55

Multiple Choice

Which financial indicator is calculated by the ratio of market price per share to earnings per share?

• A) return on investment
• B) price/earnings ratio
• C) return on equity
• D) dividend yield on common stock
• E) dividend payout ratio

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Definitions:

Significance Level

The criterion used for rejecting the null hypothesis, representing the probability of committing a Type I error.

Critical Value

A critical value is a point on the distribution of a statistical test that marks the boundary of the rejection area for the null hypothesis, aiding in decision making regarding statistical significance.

Wilcoxon Rank Test

A nonparametric statistical test used to compare two related samples, to assess whether their population means ranks differ.

Nonparametric Tests

Statistical tests that do not assume a specific distribution for the data, making them appropriate for non-normal data distributions or ordinal and nominal data.