If the Market Multiple Is 23

question 5

Multiple Choice

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

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

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Definitions:

Rate Of Return

Profitability or loss incurred from an investment within a fixed period, quantified as a percentage of the investment's buying cost.

Credit Default Swap

A financial derivative allowing an investor to "swap" or offset their credit risk with that of another investor.

CDS

CDS stands for Credit Default Swap, a financial derivative allowing an investor to "swap" or offset their credit risk with that of another investor.

Coupon Bond

A type of bond that offers interest payments through coupons to the bondholder until its maturity, when the principal amount is reimbursed.