- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Investments
- Learning Module 8. Equity Valuation: Concepts and Basic Tools
- Subject 5. Multiplier Models
CFA Practice Question
Which of the following variables is most closely watched by investors?
B. Earnings valuation stock price
C. P/E ratio
D. Book value
E. Asset value
A. Dividend valuation stock price
B. Earnings valuation stock price
C. P/E ratio
D. Book value
E. Asset value
Correct Answer: C
While all the variables are important, the P/E ratio is probably the most widely watched by all investors; it is easily found in newspapers. The other variables are more specific in use.
User Contributed Comments 6
| User | Comment |
|---|---|
| Creep | What relevance does this have?! |
| johntan1979 | I'm pretty sure you won't ask what relevance does this have during the actual exam. |
| farhan92 | if an earnings report comes out websites are more likely to provide a P/E figure than the rest. |
| ascruggs92 | Creep are you serious or just trolling everyone? |
| khalifa92 | P/E ratio is mostly cited by media and analysts. |
| MathLoser | Keep in mind that P/E stands alone mean nothing. You have to compare it with the industry's P/E and the rival companies'. |