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Question
In estimating and comparing value, the price-to-earnings (P/E) multiple has two major flaws. Which of the following are those flaws?
I. It is in squared currency units.
II. The P/E is affected by a company’s capital structure.
III. The earnings (net income) are calculated after nonoperating items.
IV. The market measure of price usually has significant error.
a) I and II only.
b) I and III only.
c) II and III only.
d) III and IV only.
Answer
This answer is hidden. It contains 14 characters.
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