A Company Whose Stock Is Selling at a P/E Ratio

question 97

Multiple Choice

A company whose stock is selling at a P/E ratio greater than the P/E ratio of a market index most likely has

• A) an anticipated earnings growth rate which is less than that of the average firm.
• B) a dividend yield which is less than that of the average firm.
• C) less predictable earnings growth than that of the average firm.
• D) greater cyclicality of earnings growth than that of the average firm.

---

Definitions:

Control Systems

Mechanisms or regulations designed to direct or manage the behavior of machines, processes, or organizations towards desired outcomes.

Ethical Behavior

Conduct that is consistent with principles of moral and professional norms, including honesty, fairness, and integrity.

Ethical Work Environment

A work setting where moral standards guide practices and behaviors, fostering trust and integrity among employees and with clients.

Misrepresentation

A legal cause of action on which an injured party seeks damages. It arises when a salesperson makes erroneous statements or offers false promises regarding a product’s characteristics and capabilities.