Which of the Following Descriptions of the Price/earnings Ratio Is

question 33

Multiple Choice

Which of the following descriptions of the price/earnings ratio is the most accurate?

• A) Investors are generally more pessimistic about the prospects for high P/E stocks.
• B) Historically, the average P/E for the market has been approximately 10.
• C) Companies with high growth rates generally have higher P/E ratios.
• D) All else the same, investors prefer to purchase stocks with relatively high P/E ratios.

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