CFA Practice Question

There are 410 practice questions for this study session.

CFA Practice Question

An analyst gathers the price-earnings ratios (P/E) for the firms in the S&P 500 and then ranks the firms from highest to lowest P/E. She assigns the number 1 to the group with the lowest P/E ratios, the number 2 to the group with the second lowest P/E ratios, and so on. The measurement scale used by the analyst is best described as ______.
A. nominal
B. ordinal
C. interval
Explanation: The analyst is using an ordinal scale which involves sorting data into categories based on some characteristic (here, the firms' P/E ratios).

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