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.

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Definitions:

Term Deposit

A fixed-term investment held at a financial institution where money can be invested for a certain period of time, earning a predetermined interest rate.

Simple Interest

Interest measured solely on the primary amount, not factoring in compounding.

Per Annum

Annually; indicating an amount or a statistical value per year.

Equivalent

Identical in worth, quantity, role, significance, and so forth.