Share A and Share B are both priced at $50 per share. Share A has a P/E
Question:
Share A and Share B are both priced at $50 per share. Share A has a P/E ratio of 17, while Share B has a P/E ratio of 24. Which is the more attractive investment, considering everything else to be the same. (a) Share A is the less attractive investment because it has a lower P/E ratio. This is because the lower the P/E ratio, the smaller the amount of earnings supporting the share price. This makes Share A less attractive investment than Share B. (b) Share B is the more attractive investment because it has a higher P/E ratio. This is because the higher the P/E ratio, the larger the amount of earnings supporting the share price. This makes share B a more attractive investment than Share A. (c) *Share A is the more attractive investment because it has a lower P/E ratio. This is because the lower the P/E ratio, the larger the amount of earnings supporting the share price. This makes Share A a more attractive investment than Share B. (d) Share B is the less attractive investment because it has a higher P/E ratio. This is because the higher the P/E ratio, the smaller the amount of earnings supporting the share price. This makes Share B less attractive investment than Share A. (e) Share A is the more attractive investment because it has a lower P/E ratio. This is because the lower the P/E ratio, the smaller the amount of earnings supporting the share price. This makes Share A less attractive investment than Share B.