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Financial Market Management — CBSE Class 10 board question

Q1. [1]
What is the formula of P/E Ratio?
  1. (a) Market price of a share / Earning per share.
  2. (b) Net profit / No. of outstanding share.
  3. (c) Net profit after tax / Total capital employed.
  4. (d) Net profit after tax / Net worth.
Previously asked in CBSE board exam
2023 92 Q3 (vi)
Generated by claude-sonnet-4-6 · 2026-06-15 07:07 · grounding rag
Model Answer

(a) Market price of a share / Earning per share.

P/E Ratio = Market Price per Share / EPS (Earnings Per Share).

Source: Profitability Ratios, Chapter 10

Explanation

The P/E Ratio is a stock market-related ratio under Profitability Ratios. Examiners expect you to directly identify option (a) and optionally state the formula. Options (b) gives EPS, (c) gives Return on Capital Employed, and (d) gives Return on Shareholders' Equity — common distractors.

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