A share has a market price of KSh 90 and earnings per share of KSh 6. What is its price-earnings ratio?
Answer and explanation
Correct answer: B. 15 times
- Step 1: P/E ratio = market price per share / earnings per share. Step 2. = 90 / 6 = 15 times. Answer: 15 times. Why not the others: 0.07 times: That is the earnings yield expressed as a fraction. 84 times: That subtracts instead of dividing. 540 times: That multiplies instead of dividing.
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