XYZ Corporation Has a P/E Ratio of 20 and EFG

question 96

Multiple Choice

XYZ Corporation has a P/E ratio of 20 and EFG Corporation has a P/E ratio of 10.It is likely that

• A) XYZ's earnings per share are twice the earnings per share of EFG.
• B) investors expect XYZ's earnings to grow faster than EFG's earnings.
• C) investors believe that for the same level of earnings growth, XYZ is a higher risk company.
• D) investors believe XYZ stock is overvalued.

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Definitions:

Affirmative Action Plans

Strategies implemented by employers to promote more inclusive work environments by increasing job opportunities for underrepresented groups.

Equal Protection Clause

A provision of the 14th Amendment to the U.S. Constitution guaranteeing that no state shall deny any person within its jurisdiction equal protection of the laws.

Constitution

The fundamental principles and established precedents according to which a state or other organization is governed.

Rehabilitation Act

U.S. legislation that prohibits discrimination on the basis of disability in programs conducted by Federal agencies or receiving federal financial assistance.