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DD Co’s P/E ratio is 12. Its competitor’s earnings yield is 10%.
When comparing DD Co to its competitor, which of the following is correct?
Earningyield P/E ratio
A Higher Higher
B Higher Lower
C Lower Higher
D Lower LowerThe correct answer is C but i can,t get the logic behind this question.The examiner is dividing P/E ratio by 1 to get the EY and also dividing EY by 1 to get the P/E ratio.
Some explanation will be helpful.
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