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The Price-Earnings Ratio Is Calculated by Dividing the Earnings Per

question 40

True/False

The price-earnings ratio is calculated by dividing the earnings per share of a stock by its fair market value.


Definitions:

Gross Revenues

The total amount of money earned by a business before any deductions or expenses are subtracted.

Indirectly Own Stock

Holding shares in a company through indirect means, such as owning a mutual fund or an exchange-traded fund that in turn owns the stock.

Ultra Vires Doctrine

A legal principle that acts of a corporation must fall within the limits of the powers granted by law and the corporation's own constitution.

Criminally Liable

The legal responsibility or accountability of a person or entity for violations of criminal law, subject to penalties such as fines or imprisonment.

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