BPP Mock exam 1 – question 25

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March 1, 2017 at 8:05 pm #375001
Candy
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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
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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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