Which of the Following Is True

question 672

Multiple Choice

Which of the following is true?

• A) The P/E ratio provides information on the price of a stock relative to its current earnings.
• B) The P/E ratio provides information on the price of a stock relative to its future earnings.
• C) The P/E ratio provides information on the price of a stock relative to its past earnings.
• D) The P/E ratio average from 1950-2008 was 26.

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Definitions:

Entry Barrier

Product or service feature that customers expect from organizations in a certain industry; an organization trying to enter this market must provide this product or service at a minimum to be able to compete.

Bank

A financial institution licensed to receive deposits, offer loans, and provide various financial services to individuals and businesses.

Buyer Power

The influence that customers have over a producing industry, often determining the market value and ensuring that services and products meet their needs.

Buyers

Individuals or entities that purchase goods or services for personal use or organizational needs.