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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Definitions:

Wholesale Price

The cost at which goods are sold by wholesalers to retailers or distributors, generally lower than retail prices.

Larger Quantities

Denotes the procurement, production, or offering of goods in amounts greater than usual.

Strategic Partners

Businesses or entities that collaborate through agreements or alliances to achieve common goals, share resources, or enhance competitive advantages.

Supply Chain Intermediaries

Entities that act as middlemen in the distribution process from manufacturer to consumer, such as wholesalers and retailers.