Historically,the typical price-earnings ratio for stocks is about
A)3
B)8
C)15
D)26

Question

Quizplus · Accepted Answer

The typical price-earnings ratio for stocks is about 15. This means that investors are willing to pay $15 for every $1 of earnings. While the exact PE ratio varies from sector to sector and from company to company, 15 is a good rule of thumb to use when evaluating the value of a stock. A PE ratio that is significantly higher than 15 may indicate that the stock is overvalued, while a ratio that is significantly lower than 15 may indicate that the stock is undervalued.

Historically,the Typical Price-Earnings Ratio for Stocks Is About