Which P/E ratios and earnings yields do not match?
A) P/E ratio 5; earnings yield 20%
B) P/E ratio 8; earnings yield 12.5%
C) P/E ratio 9; earnings yield 12 %
D) P/E ratio 10; earnings yield 10%

Question

Quizplus · Accepted Answer

Earnings yield is calculated as the inverse of the P/E ratio, expressed as a percentage. For choice C, with a P/E ratio of 9, the earnings yield should be 1/9 = 11.11%, not 12%.

Which P/E Ratios and Earnings Yields Do Not Match