Which of the Following Statements Is FALSE

question 42

Multiple Choice

Which of the following statements is FALSE?

• A)The most common valuation multiple is the price-earnings (P/E)ratio.
• B)You should be willing to pay proportionally more for a stock with lower current earnings.
• C)A firm's P/E ratio is equal to the share price divided by its earnings per share.
• D)The intuition behind the use of the P/E ratio is that when you buy a stock,you are in a sense buying the rights to the firm's future earnings and differences in the scale of the firms' earnings are likely to persist.

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Definitions:

Trustees

Individuals or organizations entrusted with the responsibility of managing assets or interests on behalf of others.

Relationship Contexts

The situational backgrounds or environments that define the nature of interactions between individuals or groups.

Relationship

A connection, association, or involvement between two or more parties, often characterized by emotional or social ties.

Calculus-Based Trust

Trust that is based on the rational calculation that another will act predictably or as expected based on incentives and deterrents.