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.
Note that the P/E ratio says noting about the relative size of the P or E of each company vs. the others. therefore one cannot make individual assumptions for a given company, but must work only with the ratios given. The P/E for the entire portfolio is the weighted average of the individual P/E values.
In this case 24.6
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Posted by Kenny M
on 2020-04-27 07:50:32 |
Spoiler
