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Five situations. Four out of five is a pass. A miss explains the reason. No account needed to answer.

Situation 1

The lesson’s dated Apple illustration is $333 ÷ about $9.50 = about 35×. What does 35× mean here?

Apple’s earnings will grow by 35 percent Apple’s fair value is exactly $333 Buyers pay about $35 for each $1 of the earnings used Apple will repay the price in exactly 35 years

Situation 2

Nike at about $37, divided by $2.10 of diluted earnings for the year ended 31 May 2026, is closest to which multiple?

About 9× About 18× 37× 2.1×

Situation 3

The share price rises while the earnings per share in the equation stay the same. What happens to P/E?

It becomes zero It falls It cannot change unless earnings change It rises

Situation 4

You decide Apple is an excellent business. What still has to be asked before it is an attractive investment?

Whether the company is famous enough Whether its P/E is lower than every other company’s What the price assumes, and whether the business can deliver enough Whether the price rose this week

Situation 5

Nike’s lesson multiple is lower than Apple’s illustration. What can you conclude from that fact alone?

Apple is definitely overpriced Nike’s earnings are safer They are different bets; the lower number is not automatically safer or better Nike is definitely the better investment

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Worked examples show the method. They are not a recommendation to buy, hold or sell, and they do not consider your circumstances. Figures are illustrations and may be out of date.

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