Which of the Following Statements Is FALSE

question 30

Multiple Choice

Which of the following statements is FALSE?

• A)You should be willing to pay proportionally more for a share with lower current earnings.
• B)The most common valuation multiple is the price-earnings ratio.
• C)A firm's price-earnings ratio is equal to the share price divided by its earnings per share.
• D)The intuition behind the use of the price-earnings ratio is that when you buy a share, 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:

Undesirable Behavior

Actions or reactions that are not wanted or are considered negative by society or individuals.

Behavior Modification

A method of changing behavior through a systematic program based on the learning principles of classical conditioning, operant conditioning, or observational learning.

Learning Techniques

Strategies or methods used to facilitate the acquisition of knowledge, skills, or understanding.

Selective Thinking

The cognitive process where an individual focuses on specific aspects of a situation while ignoring others, which can reinforce beliefs or biases.