The purpose of this paper is to consider the price earnings ratio as a measure of stock valuation. Read:
• Lan, J. (2013, September). Introduction to stock valuation: The price earnings ratio. Retrieved from http://www.aaii.com/journal/article/introduction-to-stock-valuation-the-price-earnings-ratio.
This assignment should be 1,250-1,500 words in length, in APA format, and discuss and address the following:
- The Price Earnings Ratio (P/E) – what does it tell you?
- The premise of value investing and how the P/E is related to it
- The significance of a high and low P/E
- The variations of the ratio, as explained in the article, including strengths, weaknesses and significance
- Additional business and stock market factors that should be considered while interpreting the P/E
- Your opinion of the proper role of the P/E in investing and the most effective P/E variation