Which statement(s) is/are true of PE ratios?
A) Managers, analysts, and investors expect companies with high PE ratios to experience future growth.
B) Measures the amount that investors will pay for the firm's stock per dollar of equity used to finance the firm's assets.
C) Measures how much investors are willing to pay for each dollar the firm earns per share of its stock.
D) Both A and C are true.

Question

Quizplus · Accepted Answer

The PE (Price-to-Earnings) ratio is a valuation metric that measures how much investors are willing to pay for each dollar of earnings per share, indicating expectations of future growth for companies with high PE ratios. Thus, both statements A and C are true.

Which Statement(s) Is/are True of PE Ratios