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Chartered Wealth Manager Finance — practice by topic

Browse 30 questions across 3 Finance topics. Choose what you want to revise, then open a question to check its answer and worked solution.

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Finance topics

Finance (30)Investment Certification (30)Stock Valuation (30)

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An analyst divides a share price by its earnings per share. That gives the:Read the answer and worked solution →The P/E ratio is valuable mainly because it shows the market's:Read the answer and worked solution →A P/E ratio tells you the price paid for each unit of company:Read the answer and worked solution →If earnings stay flat, the P/E ratio can be read as a share's:Read the answer and worked solution →

Worked practice questions

An analyst divides a share price by its earnings per share. That gives the:

  1. P/E ratio
  2. PIN number
  3. PAN record
  4. POS receipt
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Correct answer: A. P/E ratio

1. Price sits on top and earnings below. 2. The result is a valuation multiple. 3. That is the P/E ratio. _Source: OpenStax Principles of Finance, Chapter 11, Stocks and Stock Valuation._

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The P/E ratio is valuable mainly because it shows the market's:

  1. Extensions
  2. Expectations
  3. Expenditures
  4. Exemptions
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Correct answer: B. Expectations

1. Investors pay more when they expect growth. 2. The ratio captures that willingness. 3. So it shows expectations. _Source: OpenStax Principles of Finance, Chapter 11, Stocks and Stock Valuation._

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A P/E ratio tells you the price paid for each unit of company:

  1. Earnings
  2. Equipment
  3. Employees
  4. Elections
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Correct answer: A. Earnings

1. The denominator is earnings per share. 2. The numerator is what you pay. 3. So it is price per unit of earnings. _Source: OpenStax Principles of Finance, Chapter 11, Stocks and Stock Valuation._

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