Low P/E Ratios Tend to Indicate That a Company Will

question 106

Multiple Choice

Low P/E ratios tend to indicate that a company will _______, ceteris paribus.

• A) grow quickly
• B) grow at the same speed as the average company
• C) grow slowly
• D) P/E ratios are unrelated to growth.
• E) None of the options are correct.

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Definitions:

Motives

Internal states or conditions that activate behavior and give it direction towards specific goals or needs.

Equilibrium

Equilibrium is a state of balance or stability within a system, achieved through the equal action of opposing forces.

Drive-Reduction Theory

A theory of motivation proposing that the primary purpose of behavior is the reduction of drives, which are state of tension or arousal caused by biological or physiological needs.

Homeostatic

Pertaining to homeostasis, the process by which a steady state of internal conditions is maintained in a living organism despite external changes.