In Relation to the Price-Earnings Ratio (P/E Ratio), Which Statement

question 44

Multiple Choice

In relation to the price-earnings ratio (P/E ratio) , which statement is incorrect?

• A) Higher P/E ratios tend to be associated with growth companies.
• B) As expectations of future profits increase the P/E ratio tends to fall.
• C) It measures how much investors are willing to pay for each dollar of earnings.
• D) A P/E ratio of 5.2 means that the shares of the company are selling at 5.2 times current profits.

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Definitions:

Cultural Inertia

The resistance to change in a group's or organization's culture, often due to established norms, values, and behaviors.

Mutual Adaptation

is the process where individuals or groups adjust their behavior, expectations, or attitudes to align with each other or a changing environment.

Cross-cultural Teamwork

Involves team members from diverse cultural backgrounds working together, which can offer creative solutions but may also present challenges in communication and collaboration.

Collectivism

A social theory prioritizing group goals over individual ones, emphasizing cooperation and team harmony.