The Price to Earnings Ratio, Also Called the P/E Ratio

question 110

Multiple Choice

The price to earnings ratio, also called the P/E ratio of a stock, is a measure of the price of a share relative to the annual net income per share earned by the firm. Suppose the P/Es for a firm's common stock during the past four quarters are 10, 12, 15, and 11, respectively. The standard deviation of the P/E ratio over the four quarters is ________.

• A) 1.87
• B) 2.16
• C) 3.50
• D) 4.67

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Definitions:

Multifinality

The concept in psychology that similar early experiences can lead to different outcomes in individuals.

Equifinality

A principle in systems theory stating that a given end state can be reached by many potential means and from different starting points, emphasizing the multiplicity of approaches to achieve the same outcome.

Psychopathology

The scientific study of mental disorders, including their symptoms, causes, and treatments.

Comorbidity

The coexistence of multiple illnesses or health conditions in a patient at the same time.