Series XVEasyFundamental Analysis

The Price-to-Earnings (P/E) ratio of a stock measures:

AThe dividend paid per share
BThe price an investor pays per rupee of the company's earningscheck_circle
CThe company's total debt relative to equity
DThe book value per share

Correct answer

B. The price an investor pays per rupee of the company's earnings

lightbulbDetailed Solution

P/E = market price per share ÷ earnings per share. It shows how much the market is willing to pay for each rupee of earnings. A high P/E can indicate high growth expectations or overvaluation; it is most meaningful when compared with peers and the company's own history.

Reference: NISM Series XV Research Analyst, Chapter 3.

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