A Company with a High P/E Ratio Will Have a ____

question 11

Multiple Choice

A company with a high P/E ratio will have a ____ earnings yield.

• A) High
• B) Low
• C) Constant
• D) There is no relationship between P/E and earnings yield.
• E) Insufficient information.

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Definitions:

Bushel

A unit of volume that is used primarily in agriculture, specifically for measuring volumes of dry goods such as grains and fruits.

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than its competitors.

Absolute Advantage

The ability of an entity to produce more of a good or service with the same amount of resources than another entity.

Opportunity Cost

The price paid for not selecting the best available alternative when deciding.