As a Rough Guideline When Using Price-Earnings Multiples,keep in Mind

question 67

Multiple Choice

As a rough guideline when using price-earnings multiples,keep in mind that the market-wide price-earnings multiples have historically averaged around:

• A)24 to 25.
• B)20 to 21.
• C)16 to 17.
• D)12 to 13.

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Definitions:

Common Share

A type of equity ownership in a corporation, representing a claim on part of the company’s profits and assets.

Rights Offering

A provision allowing existing shareholders to purchase additional shares at a discount before the stock is offered to the public.

Subscription Price

The fixed price at which shares can be bought as part of a rights issue or initial offering, determined by the issuing company.