Example If an investor wishes to purchase 100 shares of FedE

Example If an investor wishes to purchase 100 shares of FedEx with a bid price of $159.78 and an ask price of $159.99, how much could the investor expect to pay for the shares? What is the P/E Ratio and Dividend Yield? Payment P/E Ratio 160.39 100 x 159.99 -$15,999 8042.25 Dividend Yield 1.00 .65 % 160.39

Solution

Bid Price is the best available price for purchase of security.

Payment expect to be made for purchase of shares = 159.78*100 = 15978

2-PE ratio = Market price/EPS = 159.78/3.80 = 42.04

3- Dividend Yield = dividend paid/market price = 1/359.78 = .00625 = .625%