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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Investing in Stocks

Company Z has a market price of Rs 360 per share, earnings per share of Rs 24 and book value per share of Rs 180. Its dividend per share is Rs 6. Which of the following correctly gives its P/E ratio and dividend yield?

The P/E ratio is 15 and the dividend yield is 1.67 percent. P/E is price Rs 360 divided by EPS Rs 24, and dividend yield is dividend Rs 6 divided by price Rs 360. The 25 percent figure would be the payout ratio, not yield.

  1. AP/E 15 and dividend yield 1.67%Correct
  2. BP/E 15 and dividend yield 25%
  3. CP/E 2 and dividend yield 1.67%
  4. DP/E 7.5 and dividend yield 3.33%

Explanation

P/E = 360/24 = 15. Dividend yield = 6/360 = 1.67%. Option 25% uses dividend/EPS (payout ratio), 2 is price to book, and 7.5 is not derived from the data.

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