Which of the Following Statements Is False

question 29

Multiple Choice

Which of the following statements is false?

• A) We can estimate the value of a firm's shares by multiplying its current earnings per share by the average P/E ratio of comparable firms.
• B) For valuation purposes, the trailing P/E ratio is generally preferred, since it is based on actual, not expected, earnings.
• C) Forward earnings are the expected earnings over the coming 12 months.
• D) Trailing earnings are the earnings over the previous 12 months.

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Definitions:

Warranties of Title

Guarantees given by a seller to a buyer that the seller has the right to transfer ownership and no undisclosed liens exist on the property.

Express Warranty

A clearly stated or written guarantee made by a seller about the quality or performance of a product, which becomes part of the contract.

Samples

Samples are small portions or examples of a product provided to consumers for the purpose of testing quality, functionality, or performance before making a purchase.

Implied Warranty

A legal assurance that a product will meet a minimum level of quality and functionality without being explicitly stated in a contract.