A big benefit of comparative P/E ratios is that they standardise stocks with different:
APlaces
BPledges
CPlaques
DPrices
Answer & Solution
Correct answer: D. Prices
1. Share prices vary hugely between firms.
2. The ratio removes that difference.
3. So it standardises different prices.
_Source: OpenStax Principles of Finance, Chapter 11, Stocks and Stock Valuation._
Keep practising Stock Valuation
Browse all Stock Valuation questions for Chartered Wealth Manager, or explore more Finance topics.