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Basic Question 1 of 11

The P/E ratios of most U.S. companies fall into which of the following categories?

A. 0-10
B. 10-20
C. 20-30
D. 30-40
E. 40-50

User Contributed Comments 14

User Comment
DannyZhou How would I know this? Wild guess? Or is it supposed to be common knowledge?
raymondg Its common knowledge
DS12 It is mentioned in the book.
acemaj Both.
johntan1979 Don't be ignorant. You want to be a CFA, so by right you should know these things!
gill15 It's a pretty valid question. If I'm writing this exam I would want to know where to get this type of information so I could get it right.

And Yeah its in the text]
kritan johntan; and you should know you that one never IS a CFA, but a CFA charterholder...
farhan92 B or C make the most sense (without reading the book)
Teeto One can think in terms of required return on equity. 5%-10% (or P/E 10-20) is the most reasonable one.
houstcarr question was actually referring to US companies in general, which do not trade in that range on average. but if referring to the large caps, then yes. take a look at pink sheets
Inaganti6 Lol John Tan you need to brush up on VII of ethics
Logaritmus Nowadays 20-30 is a P/E ratio for most US Stocks (thanks to negative real interest rates). On the other hand, if interest rates are higher you'll most likely have lower P/E ratio i.e. in Emerging Markets (Turkey, Russia) most companies now have P/E < 10.
sshetty2 AN is trying to say that we should be reading the textbook and not relying solely on their study notes; which is something i have not been doing ffs.
pigletin you should know this fact. but it will never be tested in cfa exam
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I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz

Tamara Schultz

Learning Outcome Statements

explain the rationale for using price multiples to value equity, how the price to earnings multiple relates to fundamentals, and the use of multiples based on comparables

calculate and interpret the following multiples: price to earnings, price to an estimate of operating cash flow, price to sales, and price to book value

CFA® 2025 Level I Curriculum, Volume 3, Module 8.