The Appropriate P/E Ratio to Be Used for Stock Valuation

question 51

True/False

The appropriate P/E ratio to be used for stock valuation can be calculated at any time by dividing the current stock price by the last twelve months of earnings per share.

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Definitions:

Turnover

The ratio of the trading activity of a portfolio to the assets of the portfolio.

Liquidity Betas

A measure of how sensitive an asset's price is to changes in market liquidity, often used in financial modeling to assess the impact of liquidity risk.

Priced Factor

An element affecting the pricing of securities that is reflected in market prices due to its influence on asset returns.

Market Illiquidity

A situation in which an asset cannot be easily sold or exchanged for cash without a substantial loss in value.