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Paul has 100 stocks of Geetex Ltd. He had bought them in the primary market. The face value of these stocks was $10. These stocks show a high potential and now have a market value of $60. Geetex Ltd.’s earning per share is $2.50. What is the PE ratio? A. 24 B. 22 C. 4 D. 20 E. 60

Respuesta :

Answer: 24

Step-by-step explanation:

The price to earnings ratio (PE ratio) is used to know if the price of stock of a particular company is either overvalued or undervalued.

The price to earnings ratio is calculated as:

= Price per share/Earnings per share

where Price per share = $60

Earnings per share = $2.50

PE Ratio = $60/$2.50

= 24

Therefore, the PE ratio is 24.

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