Which of the Following Statements Is True About the Price

question 50

Multiple Choice

Which of the following statements is true about the price earnings (P/E) ratio?

• A)It is a ratio of importance to creditors.
• B)A high P/E ratio indicates investors have little confidence in the future profit potential of the company.
• C)The P/E ratio could be used to approximate the value investors would be willing to pay for the company's acquisition from existing owners.
• D)The P/E ratio increases as profit increases.

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Definitions:

Interest Owed

The amount of interest that has been incurred on a loan or debt but has not yet been paid.

Missing Value

A data point that is lost or not recorded in a dataset.

Equal Payments

Regular payments of the same amount over a period of time, typically in the context of loans or leases.

Missing Value

A term used in statistics and data analysis to describe data points or elements that are absent or not recorded.