NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Investing in Stocks (NISM XXI-A)
A company's shares are quoted at ₹480 and its earnings per share for the last year were ₹32. What is its price-to-earnings (P/E) ratio?
The P/E ratio is 15 times, found by dividing the market price of ₹480 by earnings per share of ₹32. It shows how many rupees investors pay for each rupee of annual earnings. Inverting the ratio would wrongly give the earnings yield.
- A12 times
- B15 timesCorrect
- C18 times
- D0.067 times
Explanation
P/E = market price divided by EPS = 480 / 32 = 15 times. Check: 15 x 32 = 480. The figure 0.067 results from inverting the ratio, which gives the earnings yield rather than P/E.
Did you get it right without looking?
One question tells you little. A timed set on Investing in Stocks (NISM XXI-A) shows your real accuracy, how long you take and where you lose marks.
More Investing in Stocks (NISM XXI-A) questions
- In the context of equity shares, what does the term 'face value' of a share represent?
- In equity analysis, the price-to-book value (P/B) ratio of a company is calculated by dividing the market price per share by which of the fo…
- A company announces a bonus issue in the ratio 1:2 (one bonus share for every two held). The cum-bonus share price is ₹300. Ignoring other f…
- A stock has a dividend of Rs 12 per share and a current market price of Rs 480. Its face value is Rs 10. What is the dividend yield?
- A company's shares trade at a market price of Rs 480 and its earnings per share for the last year were Rs 24. What is its price-to-earnings …
- A company with 10 crore shares outstanding reports a net profit of Rs 150 crore and pays total dividends of Rs 45 crore. What is its dividen…