Which of the Following Statements Is FALSE

question 13

Multiple Choice

Which of the following statements is FALSE?

• A)The most common valuation multiple is the price-earnings (P/E)ratio.
• B)You should be willing to pay proportionally more for a stock with lower current earnings.
• C)A firm's P/E ratio is equal to the share price divided by its earnings per share.
• D)The intuition behind the use of the P/E ratio is that when you buy a stock,you are in sense buying the rights to the firm's future earnings and differences in the scale of the firms' earnings are likely to persist.

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Definitions:

Fundamental Attribution Error

The tendency to overemphasize personality traits and underestimate situational factors when explaining someone else's behavior.

Internal Dispositions

Enduring personality traits, attitudes, or behaviors that an individual consistently exhibits across different situations.

Situational Determinants

These refer to external factors or environmental conditions that influence an individual's behavior, emotions, and decisions in different contexts.

Conformity

A change in behavior due to explicit or implicit social pressure.