Which of the Following Is NOT a Negative Attribute of the Price-Earnings

question 27

Multiple Choice

Which of the following is NOT a negative attribute of the price-earnings multiple valuation model?

• A)It implicitly assumes that comparable firms are already fairly pried in the market place.
• B)Its focus on earnings may be clouded by dubious accounting assumptions.
• C)It is based on relative market measures rather than book measures.
• D)It cannot be used when there are negative earnings.(This would imply a firm value of less than $0!)

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