PRICE EARNINGS MULTIPLE Definition

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PRICE EARNINGS MULTIPLE: The price-earnings ratio (P/E) is simply the price of a companys share of common stock in the public market divided by its earnings per share. Multiply this multiple by the net income and you will have a value for the business. If the business has no income, there is no valuation. If the common stock in not publicly traded, valuation of the stock is purely subjective. This may not be the best method, but can provide a benchmark valuation.

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INDIVIDUAL INVESTOR is a person that buys or sells securities for his/her own account. The individual investor is also called a retail investor or retail shareholder.

ROE see RETURN ON EQUITY.

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