The Indian stock markets are going through a rough patch currently. While the Sensex climbs up by more than 500 points one day it lops off another 300 points the very next day.
How can investors keep their faith in such a market?
Here's quiz on ratios of five fundamental concepts that will help you identify value in stocks.
1. What is PE ratio of a share?
Price earnings ratio
Price equivalent ratio
Right!Price earnings ratio is one of the tools to measure if a stock is expensive or cheap.
Significance: Higher PE means an expensive stock and vice versa. PE generally tells you how much an investor is ready to pay for buying a company’s share for every rupee that the company earns in profit. A PE of 12 means that an investor is willing to pay Rs 12 for every rupee that a company earns in profit.
Disclaimer: This quiz is designed only for educative purpose. The options offered in this quiz, though true, are simplified and may not conform exactly with all concepts of economics .
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