Which of the Following Statements Is False

question 70

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 a sense buying the rights to the firm's future earnings and differences in the scale of firms' earnings are likely to persist.

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Definitions:

Bargaining

A process of discussion aimed at reaching an agreement between parties with differing interests.

Interchangeable

Items or elements that can be substituted for one another without affecting functionality or value.

Intragroup Conflict

Disagreements or disputes that occur within a single group, team, or organization.

Sources of Conflict

Factors or circumstances that can lead to disagreements or disputes between individuals or groups, including differences in values, needs, desires, or perceptions.