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

question 9

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 as a whole 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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