Which of the Following Is an Assumption of the Price/earnings

question 8

Multiple Choice

Which of the following is an assumption of the price/earnings ratio method?

• A)The comparison investment on which the price/earnings multiple is based has the discount rate less than the earnings growth as the project being valued.
• B)The comparison investment on which the price/earnings multiple is based has the discount rate equal to the risk-free rate as used for the project being valued.
• C)The comparison investment on which the price/earnings multiple is based has the discount rate less than the risk-free rate as the project being valued.
• D)The comparison investment on which the price/earnings multiple is based has the same discount rate and earnings growth as the project being valued.

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