A low price-earnings ratio indicates that either the stock is
A)undervalued or people are relatively optimistic about the corporation's prospects.
B)overvalued or people are relatively optimistic about the corporation's prospects.
C)overvalued or people are relatively pessimistic about the corporation's prospects.
D)undervalued or people are relatively pessimistic about the corporation's prospects.

Question

Quizplus · Accepted Answer

A low price-earnings ratio suggests that the stock may be undervalued or that investors are relatively pessimistic about the company's future earnings potential.

A Low Price-Earnings Ratio Indicates That Either the Stock Is