Assuming That Other Things Are Constant, the Price Earnings (P/E)

question 60

Multiple Choice

Assuming that other things are constant, the price earnings (P/E) ratio:

• A)is higher for firms with high growth prospects and lower for riskier firms.
• B)is lower for firms with high growth prospects and higher for riskier firms.
• C)is not affected by the growth prospects of a firm.
• D)is equal to the market price of the share of a firm.
• E)is equal to the earnings per share of a firm.

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Definitions:

Job Specialization

The process of focusing one's work and skill development on a specific area of expertise to increase efficiency and productivity.

Task Significance

The degree to which a job has a substantial impact on the lives or work of other people, within or outside the organization.

Independence

The state of having the self-autonomy and freedom to make decisions without undue influence from others.

Discretion

The freedom to decide what should be done in a particular situation.