When calculating the P/E ratio of an index:
1. Is the p/e ratio for each individual stock weighted giving the largest stocks the highest weighting?
2. What about negative p/e ratios?
3 How are outliers handled? Let's say a company just scraped a profit then it would have a p/e ratio of 10,000 which would massively distort the average.
1. Is the p/e ratio for each individual stock weighted giving the largest stocks the highest weighting?
2. What about negative p/e ratios?
3 How are outliers handled? Let's say a company just scraped a profit then it would have a p/e ratio of 10,000 which would massively distort the average.
P/E ratio
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