Which of the following is a problem that exists when using an industry median P/E ratio instead of an industry mean P/E ratio when trying to avoid the 1/X problem?

Question

Quizplus · Accepted Answer

The median P/E ratio, by definition, is the middle value in a list of numbers sorted from lowest to highest, thus it ignores the P/E ratios of all firms except the one in the middle (or the average of the two middle numbers if there is an even number of firms). This means it does not consider the P/E ratios of firms above or below the median, which can be a significant limitation when trying to get a comprehensive view of the industry's valuation metrics.

Which of the Following Is a Problem That Exists When