Question

The actual stock price is $70 and the return on equity is 18%. The PE ratio is 5.556 and
EPS is $12.60. The stock is-
A. Undervalued
B. Overvalued
C. Correctly valued
D. None of the above
Answer
A
MED B​

Answer 1

Generally speaking, a high P/E ratio indicates that investors expect higher earnings. However, a stock with a high P/E ratio is not necessarily a better investment than one with a lower P/E ratio, as a high P/E ratio can indicate that the stock is being overvalued

Answer 2

Answer:

A .. ..................................................