Trailing P/E (QBank question help)

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hbeytollah

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A QBank question asked for the trailing P/E. Several key items were given and we were to use the formula (1-b) x (1+g)/ (r-g).
Though the current share price and current earnings were also given. The answer from the formula was the correct asnwer, but why does the current price/current earnings not yield the same result?
Thanks for the help.
 
Did it ask for the actual trailing P/E ratio, or the justified trailing P/E ratio?
These value do not have to be the same.
 
The question asked for the justified trailing. What is the difference?
 
The justified ratio is what it should be, if the stock is priced fairly.
The actual ratio is what it is, with the stock possibly overpriced, fairly priced, or underpriced.
 
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