The Relative P/E Model Assumes That a Company Will Keep

question 43

True/False

The relative P/E model assumes that a company will keep its historical relationship to the market's price-earnings ratio.

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Definitions:

Liquidate Positions

The process of selling securities or other assets to convert them into cash, often done to exit a market or meet financial obligations.

Money Market Mutual Funds

Mutual funds that invest in short-term, high-quality debt securities and are designed to offer investors liquidity and a safe place to invest in the short term.

Commercial Paper

Short-term unsecured debt issued by large corporations.

CDs

Certificates of Deposit, a type of time deposit at banks and financial institutions offering a fixed interest rate over a fixed period.