To the Extent That Current Profits Are Directly Related to Future

question 43

Multiple Choice

To the extent that current profits are directly related to future profits, a high price/earnings ratio would indicate that stocks are

• A) inexpensive.
• B) expensive.
• C) going to increase in value in the future.
• D) most likely to fall in value if interest rates decline.

Understand the notion of the time-value of money and its implications for financial decisions.

Examine the effects of changes in supply and demand on interests and rents.

Understand the concept of economic profit versus salaries and its significance in business.

Discern the difference between insurable and uninsurable risks in entrepreneurship.

---

Definitions:

Expert Testimony

Evidence provided in court by a qualified professional on subjects requiring specialized knowledge.

Objective

Something that is not influenced by personal feelings or opinions and is based on facts; often a goal that is aimed to be achieved.

Testimony

Testimony refers to a statement or assertion made by a witness, often in a legal setting, to provide evidence or convey information.

Poisoning the Well

A logical fallacy where adverse information about a target is preemptively presented to an audience, with the intention of discrediting or ridiculing everything the target person is about to say.