[jessicarawlinson]

Thank you sir.

I understand that if the PE is higher the earnings yield will be lower thank you for explaining, but 15 is a lower number than 16 so I don’t quite understand how the PE is higher than the competitor when the actual number is lower?

I have seen another example where the answer is the other way around;

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?
Earning yield – P/E ratio
A Higher Higher
B Higher Lower
C Lower Higher
D Lower Lower

The correct answer is C and I understand this because DD CO’s PE is 12 and the competitor is 10, so the PE is higher and the yield will be lower

[jessicarawlinson]

Hello sir, question 340 (following on from 339), page 118 in the BBP practice and revision kit

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