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CFP Certified Financial Planner Test Prep

Category - Foundation

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One share of Caracal Enterprises has a par value of $50, while its market value is $120. The earnings per share (EPS) for Caracal Enterprises is $15. What would be the P/E ratio?

15
12
8
None of the above

Explanation

Answer: C - The P/E ratio of the company is 8.

To find the P/E ratio, divide the market value by the EPS. In this case, $120$15 = 8.

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