All Else Equal,the Forward-Looking Price-Earnings Multiple Is ________ Related to Risk

question 73

Multiple Choice

All else equal,the forward-looking price-earnings multiple is ________ related to risk and ________ related to growth.

• A)indirectly; directly
• B)indirectly; indirectly
• C)directly; directly
• D)directly; indirectly

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Definitions:

PV

An abbreviation for present value, referring to the value today of a future payment or series of payments, adjusted for a specific rate of return.

Discount Rate

This rate, integral to discounted cash flow analysis, is employed for determining the present value of cash flows expected in the forthcoming periods.

Compounding

Compounding in finance refers to the process where an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time.

Compound Interest

Interest calculation that encompasses both the initial principal and the cumulative interest that has accrued in preceding periods on a deposit or loan.