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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Finance: P/E of Stocks The price-to-earnings (P/E) ratio is an important tool in financial work. A random sample of 14 large U.S. banks (J.P. Morgan, Bank of America, and others) gave the following P/E ratios
|
24 |
16 |
22 |
14 |
12 |
13 |
17 |
|
22 |
15 |
19 |
23 |
13 |
11 |
18 |
The sample mean is
. Generally speaking, a low P/E ratio indicates a “value” or bargain stock. A recent copy of the Wall Street Journal indicated that the P/E ratio of the entire S&P 500 stock index is μ = 19. Letx be a randomvariable representing the P/E ratio of all large U.S. bank stocks. We assume thatx has a normal distribution and σ = 4.5. Do these data indicate that the P/Eratio of all U.S. bank stocks is less than 19? Use a = 0.05.
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