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

question 51

Multiple Choice

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

• A) It measures how much investors are willing to pay for each dollar of earnings.
• B) Higher P/E ratios tend to be associated with growth companies.
• C) A P/E ratio of 9.1 means that the shares of the company are selling at 9.1 times current profits.
• D) As expectations of future profits increase the P/E ratio tends to fall.

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