A Low P/E for a Stock Indicates That

question 133

Multiple Choice

A low P/E for a stock indicates that

• A)people may expect earnings to fall in the future,perhaps because the firm will be faced with increased competition.
• B)its dividends have been low so that no one is willing to pay very much for it.
• C)the corporation is possibly overvalued.
• D)All of the above are correct.

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Definitions:

Compounded Annually

the process of adding interest to the principal sum of a loan or deposit once every year.

RRSP

A Retirement Savings Plan officially recognized for both working individuals and self-employed people in Canada, designed for saving and investing towards retirement.

Annual Contributions

Regular amounts added to an investment, savings account, or retirement fund once every year.

Compounded Semi-Annually

Interest that is compounded semi-annually is applied to the principal amount twice a year, leading to an increase in the overall amount of interest earned compared to simple interest.