n NISM Certifications
XV NISM Series XV
Medium

All else being equal, a stock with a relatively low price-to-earnings (PE) ratio is considered:

Practice question from NISM XV Mock Test 7 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Overvalued / Expensive

  2. Undervalued / Cheap

    Correct answer

  3. C

    More volatile

  4. D

    Less volatile

Why this is the answer

Low PE suggests the stock is priced cheaply relative to earnings; high PE indicates expensive valuation.

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