The Price/earnings Ratio

question 53

Multiple Choice

The price/earnings ratio:

• A) Is calculated by multiplying the market price of a stock by its earnings per share.
• B) Is found by dividing the market price of a stock by the firm's total earnings.
• C) Is computed by dividing the book value of a stock by the firm's EPS.
• D) Is calculated by adding the market price of a stock to the firm's EPS.
• E) Is found by dividing the market price of a stock by the firm's EPS.

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Definitions:

Ancillary Products

Products or services that are supplementary to a main product or service, often enhancing the value or experience of the main offering.

Wholesale Goods

Goods sold in large quantities at reduced prices, typically to retailers who then sell them to the public.

Retail Products

Goods that are sold to the public through stores, online, or other channels, typically for personal or household use.

Durable Goods

Products or goods that do not quickly wear out and provide utility over time, often lasting for years.