My friend WG (a.k.a. Wise Guy) recently bought some shares. He does not disclose neither the quantity nor the prices but would like to get your help in evaluating the profitability of his investment:
40% of his money - in shares of company A(P/E=35),
35% - shares of company B(P/E=20)
15% - company C(P/E=16),
& 10% - company D (P/E=12).
WG likes to get from you the value
of his portfolio's P/E index.
Rem: P/E ratio is defined as market value divided by earnings.
(In reply to
different solution by xdog)
WLOG let the value of WG's portfolio (the total of the current prices) be 1.
The total earnings on his portfolio is
.4/35 + .35/20 + .15/16 + .1/12 ~= .0466369047619047
The overall P/E is therefore the reciprocal of this:
1/0.0466369047619047 ~= 21.442246330568
or exactly 33600/1567 calculated with UBASIC.
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Posted by Charlie
on 2020-04-27 18:56:14 |
agree with xdog's solution
