CFA Practice Question

There are 191 practice questions for this study session.

CFA Practice Question

The P/E ratios of most U.S. companies fall into which of the following categories?

A. 0-10
B. 10-20
C. 20-30
D. 30-40
E. 40-50
Correct Answer: B

The S&P 500 and the Dow Jones Industrial Average, which represent over 500 companies, generally sell at P/E ratios of between 12 and 18 historically (and occasionally above or below these numbers).

User Contributed Comments 14

User Comment
DannyZhou How would I know this? Wild guess? Or is it supposed to be common knowledge?
raymondg Its common knowledge
DS12 It is mentioned in the book.
acemaj Both.
johntan1979 Don't be ignorant. You want to be a CFA, so by right you should know these things!
gill15 It's a pretty valid question. If I'm writing this exam I would want to know where to get this type of information so I could get it right.

And Yeah its in the text]
kritan johntan; and you should know you that one never IS a CFA, but a CFA charterholder...
farhan92 B or C make the most sense (without reading the book)
Teeto One can think in terms of required return on equity. 5%-10% (or P/E 10-20) is the most reasonable one.
houstcarr question was actually referring to US companies in general, which do not trade in that range on average. but if referring to the large caps, then yes. take a look at pink sheets
Inaganti6 Lol John Tan you need to brush up on VII of ethics
Logaritmus Nowadays 20-30 is a P/E ratio for most US Stocks (thanks to negative real interest rates). On the other hand, if interest rates are higher you'll most likely have lower P/E ratio i.e. in Emerging Markets (Turkey, Russia) most companies now have P/E < 10.
sshetty2 AN is trying to say that we should be reading the textbook and not relying solely on their study notes; which is something i have not been doing ffs.
pigletin you should know this fact. but it will never be tested in cfa exam
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