A growth stock portfolio and a value portfolio might be characterized:
A) each by their P/E relative to the index P/E; high P/E for growth and lower for value.
B) as earning a high rate of return for a growth security and a low rate of return for value security irrespective of risk.
C) low unsystematic risk and high systematic risk respectively.
D) moderate systematic risk and zero systematic risk respectively.
E) None of these.

Question

Quizplus · Accepted Answer

A growth stock portfolio is typically characterized by a high P/E ratio relative to the market, while a value stock portfolio tends to have a lower P/E ratio. Therefore, option A correctly characterizes the two portfolios. The other options are not accurate characterizations of growth and value portfolios.

A Growth Stock Portfolio and a Value Portfolio Might Be