Select all that are true with respect to a Price/Earnings (P/E) ratio. Group of answer choices Low P/E stocks are good investments, high P/E stocks are bad investments. A P/E ratio tells you how much you pay per $1 of a firm's earnings when you buy the stock. A P/E ratio tells you the ratio of a firm's stock price relative to its earnings per share. A stock that trades at a P/E of 10 is a better investment than a stock that trades at a P/E of 20. A stock that trades at a P/E of 20 is a better investment than a stock that trades at a P/E of 10. Although not always the case, stocks with higher P/E ratios generally have higher growth prospects relative to their current level of earnings than stocks with lower P/E ratios.
Select all that are true with respect to a Price/Earnings (P/E) ratio. Group of answer choices Low P/E stocks are good investments, high P/E stocks are bad investments. A P/E ratio tells you how much you pay per $1 of a firm's earnings when you buy the stock. A P/E ratio tells you the ratio of a firm's stock price relative to its earnings per share. A stock that trades at a P/E of 10 is a better investment than a stock that trades at a P/E of 20. A stock that trades at a P/E of 20 is a better investment than a stock that trades at a P/E of 10. Although not always the case, stocks with higher P/E ratios generally have higher growth prospects relative to their current level of earnings than stocks with lower P/E ratios.
Century 21 Accounting Multicolumn Journal
11th Edition
ISBN:9781337679503
Author:Gilbertson
Publisher:Gilbertson
Chapter18: Acquiring Capital For Growth And Development
Section: Chapter Questions
Problem 1ANFS
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Question
Select all that are true with respect to a Price/Earnings (P/E) ratio.
Group of answer choices
Low P/E stocks are good investments, high P/E stocks are bad investments.
A P/E ratio tells you how much you pay per $1 of a firm's earnings when you buy the stock.
A P/E ratio tells you the ratio of a firm's stock price relative to its earnings per share.
A stock that trades at a P/E of 10 is a better investment than a stock that trades at a P/E of 20.
A stock that trades at a P/E of 20 is a better investment than a stock that trades at a P/E of 10.
Although not always the case, stocks with higher P/E ratios generally have higher growth prospects relative to their current level of earnings than stocks with lower P/E ratios.
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