n NISM Certifications
XV NISM Series XV
Medium

All other factors being equal, how is an equity share with a low P/E ratio compared to its peers generally perceived?

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

Options

  1. A

    Expensive

  2. Cheap

    Correct answer

  3. C

    Out of the Money

  4. D

    Very volatile

Why this is the answer

A low P/E relative to peers indicates the stock is priced lower per unit of earnings, suggesting potential undervaluation. It reflects market perception of the stock being “cheaper” rather than commenting on risk or volatility.

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