Asked by Willie Alfaro Mora on May 11, 2024
Verified
The "normal" range of price-earnings ratios for the S&P 500 Index is
A) between 2 and 10.
B) between 5 and 15.
C) less than 8.
D) between 12 and 25.
E) greater than 20.
Price-Earnings Ratios
A valuation ratio of a company's current share price compared to its per-share earnings, used to evaluate if a stock is over or undervalued.
S&P 500 Index
An American stock market index based on the market capitalizations of 500 large companies listed on stock exchanges in the United States.
- Analyze the relationship between interest rates, business investment, and consumer spending.
Verified Answer
KN
Kaliea NilesMay 16, 2024
Final Answer :
D
Explanation :
The "normal" range of price-earnings ratios for the S&P 500 Index historically falls between 12 and 25. This range can vary depending on market conditions, economic factors, and investor sentiment, but it is a general guideline for what is considered a typical P/E ratio range for companies within the index.
Learning Objectives
- Analyze the relationship between interest rates, business investment, and consumer spending.
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