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BPP Mock exam 1 – question 25

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › BPP Mock exam 1 – question 25

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  • March 1, 2017 at 8:05 pm #375001
    Candy
    Member
    • Topics: 135
    • Replies: 79
    • ☆☆☆

    Dear John,

    Please explain how they got earnings yield = 6.7%

    P/E = 15

    1/(P/E ratio) = 6.7?

    I got:

    1/15 = 0.06%.

    Many thanks

    March 1, 2017 at 10:35 pm #375027
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54835
    • ☆☆☆☆☆

    1/15 = 0.0666

    This is the same as 6.66% (which rounds to 6.7%), just as 0.01 is the same as 1% and 0.10 is the same as 10%.

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