P/E ratio is:

**The reasoning** The P/E ratio stands for **Price-to-Earnings ratio**. It's a fundamental metric in financial analysis that tells investors how much they're paying for each naira (or dollar) of a company's profit. **Formula**: P/E ratio = Market Price per Share ÷ Earnings per Share (EPS) For example, if a company's shares cost ₦100 and it earns ₦10 per share, the P/E ratio = 100 ÷ 10 = 10. This means investors are willing to pay ₦10 for every ₦1 of earnings. It helps compare whether stocks are overvalued or undervalued. **Why the wrong options tempt you** - **B) Profit/Equity** sounds business-y, but that's actually ROE (Return on Equity) — a different ratio entirely - **C) Price/Equity** mixes the formula — equity relates to book value, not this ratio - **D) Profit/Expense** would measure efficiency, not valuation The trap is that all options contain legitimate financial terms, but only **Price** and **Earnings** combine to form P/E. **Quick takeaway** P/E = **P**rice/**E**arnings — it tells you how expensive a stock is relative to what the company actually earns. Remember: investors pay a **Price** to buy **Earnings**.