Price-earnings ratios of large U.S. banks during the economic recession in 2002:

Question

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During economic recessions, earnings of companies, including large U.S. banks, typically decrease due to lower economic activity. This decrease in earnings often leads to a decrease in price-earnings (P/E) ratios, as the denominator (earnings) of the P/E ratio equation decreases, assuming the stock price does not increase to offset this effect.

Price-Earnings Ratios of Large U