Question: Why is the P/E ratio important in estimating the value of stocks in an index? P/E ratio is more volatile, thus harder to predict, than

Why is the P/E ratio important in estimating the value of stocks in an index?

  1. P/E ratio is more volatile, thus harder to predict, than earnings

2. The P/E ratio is multiplied by the earnings estimate to estimate the value

3. The P/E ratio is the price per share divided by the earnings per share

4. The P/E ratio is a popular way of comparing stocks with quite different prices

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