Which of the Following Would Most Likely Affect the P/E

question 83

Multiple Choice

Which of the following would most likely affect the P/E ratio of the market in general?

• A)A significant change in government fiscal policy
• B)Declining earnings of the S&P 500 companies
• C)investors' expectations about inflation changes and becomes either more positive or more negative
• D)All of the above could have a significant impact.

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Definitions:

Annuity Due

An annuity with payments occurring at the beginning of each period.

Amortized Mortgage

A type of loan where the principal and interest are paid down through fixed monthly payments over the loan's term, leading to a fully paid-off mortgage.

Nominal Interest Rate

The interest rate stated on a loan or financial product, not accounting for inflation or fees that affect actual interest earned or paid.

Compounded Annually

The process wherein the interest earned on an investment is added to the principal at the end of each year, with future interest calculated on the new total.