CFA Practice Question

There are 191 practice questions for this study session.

CFA Practice Question

The price-earnings ratio valuation method values a company ______.
A. on an absolute basis
B. relative to other comparable companies based on the ratio of value to earnings
C. based on historical earnings
Explanation: The price-earnings ratio valuation method values a company relative to other comparable companies based on the ratio of value to earnings. The P/E method estimates value by applying a relative ratio of price to earnings to a company's expected 12-month earnings.

User Contributed Comments 3

User Comment
danlan Not historical earnings?
george2006 It is about the P/E valuation method, not the P/E itself.
khalifa92 multiples can be historical or forecasted
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