In the 1990s, Several Stocks Had Very, Very High Price

question 161

Essay

In the 1990s, several stocks had very, very high price to earnings ratios. These stocks appeared overvalued to many observers. What might the people who bought them have been thinking?

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Definitions:

Goodwill

An intangible asset that arises when a business is acquired for more than the fair value of its net identifiable assets, reflecting the company's brand, customer base, and other non-physical assets.

Restriction

A rule or condition that limits or controls someone's actions or a particular activity.

Business Elsewhere

The decision by a customer to take their business to a competitor or alternative provider, usually due to dissatisfaction.

Necessary

Items or services considered essential for basic living and survival, often distinguishing between luxury goods and necessities for legal and economic purposes.