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P/E ratio: Quiz


Question 1: Share prices in a ________ are determined by market supply and demand, and thus depend upon the expectations of buyers and sellers.
Public companyGovernment-owned corporationGovernment agencyStatutory corporation

Question 2: In principle, the P/E ratio incorporates this information, and different P/E ratios may reflect the structure of the ________.
AssetAccountancyEquity (finance)Balance sheet

Question 3: Sites such as ________ offer these comparisons in one table.
Bloomberg L.P.Dick OlverThomson ReutersReuters

Question 4: [2] It is a ________ used for valuation: a higher P/E ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with lower P/E ratio.
EV/EBITDAFinancial ratioReturn on equityDividend

Question 5: For a stock purchaser, this risk includes the possibility of ________.
DebtBankruptcyBond (finance)Insolvency

Question 6: The resulting ________ is an amount of cash per share.
EV/EBITDAReturn on equityFinancial ratioDividend

Question 7: The P/E ratio has units of years,[note 1] which can be interpreted as "number of years of earnings to pay back purchase price", ignoring the ________.
Time value of moneyPhilosophy of space and timeSolar timeImmortality

Question 8: The P/E ratio (price-to-earnings ratio) of a ________ (also called its "P/E", "PER", "earnings multiple," or simply "multiple") is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share.
Stock marketStockStock exchangePreferred stock

Question 9: The earnings per share in the ________ depends on the type of P/E:
Irrational numberNumberDivision (mathematics)Fraction (mathematics)

Question 10: By comparing price and earnings per share for a company, one can analyze the market's ________ of a company and its shares relative to the income the company is actually generating.
Stock valuationEfficient-market hypothesisFundamental analysisStock selection criterion


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