Which of These Factors Are Most Associated with a High

question 21

Multiple Choice

Which of these factors are most associated with a high PE ratio?

• A)High growth opportunities and high risk
• B)Low risk and low growth opportunities
• C)Conservative accounting practices and low risk
• D)High risk and low growth opportunities
• E)Aggressive accounting practices and high growth opportunities

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Definitions:

Common Stock Dividends Distributable

A portion of earnings allocated by a company to be distributed to holders of its common stock, recognized as a liability until paid out.

Paid-in Capital

Equity capital that is contributed to a corporation by its shareholders, in addition to the prescribed par value, representing funds received from investors.

Cumulative Preferred Stock

A type of preferred stock that entitles the shareholder to receive dividends that, if omitted, accumulate and must be paid before dividends can be paid to common shareholders.

Annual Dividend

The total amount of dividend payments made to shareholders in a year.