Weighted average harmonic

[passcfaforsure]

Please coment on this formula , no idea of how to get this 1/[(12/27)(1/12) + (15/27)(2/15)] = 27/3 = 9.0

An analyst is calculating the weighted harmonic mean P/E ratio of a 2-stock portfolio. Stocks AAA and BBB have prices of $12 and $15, respectively, and EPS of $1 and $2, respectively. Which of the following is the weighted harmonic mean P/E of the portfolio closest to?
A)
9.23
B)
9.75
C)
9.00
Your answer: C was correct!
The weighted harmonic mean is 1/[(12/27)(1/12) + (15/27)(2/15)] = 27/3 = 9.00 The weighted harmonic mean of the individual stocks P/Es is the best measure of the P/E for a portfolio of stocks.

 

[Capt. Save_A_Ho]

You probably won’t have to calcute this on the test b/c it is a subset of a subset of a subset.
I would say just remember that to calculate the P/E for a portfolio of stocks use the weighted harmonic mean.
If you must know, it looks like they took the weighted average E/P then they took the reciprocal which is the P/E