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Managing my investments
Managing my investments

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2.2.4 Share valuation

This short quiz is a chance to quickly check what you know about share valuation.

Activity 2.3 What do you know about share valuation?

a. 

2 pence


b. 

450 pence


c. 

45 pence


d. 

0.5 pence


The correct answer is b.

Discussion

The ‘fair’ share price is 30 pence × 15.

a. 

pre-tax profits divided by the total cost of dividends


b. 

share price divided by earnings per share


c. 

earnings per share divided by net dividend per share


d. 

dividend income per share as a percentage of the share price.


The correct answer is c.

Discussion

The ratio shows how well placed a company is financially to pay its shareholders a dividend.