Question
When investing in stocks, investors often base their decision on the P/E ratio, which is the ratio of price per share to earnings per share.
When investing in stocks, investors often base their decision on the P/E ratio, which is the ratio of price per share to earnings per share.
Here are links to information about the stocks of Amazon and Alphabet (the parent company of Google):
Amazon stock
Alphabet (Google) stock
As may be seen, Amazon has a trailing 12-month P/E ratio of nearly 60 while Alphabet, a P/E ratio of just over 30. What do you think are possible reasons for the difference in the P/E ratios? In general, other things being the same, would you go for the stock with the lower or higher P/E?
Note that there is no single correct answer to these questions. But whatever stand you take, you need to be able provide some good reasons for it.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Household Finance Adrift In A Sea Of Red Ink Palgrave Macmillan Studies In Banking And Financial Institutions
Authors: D. Chorafas
1st Edition
1137299444, 1137299452, 9781137299451
