You have two roommates who invest in the stock market 7a.JOne roommate says she buys shares only in companies that everyone believes will experience big increases in profits in the future. How do you suppose the price-earning ratio of these companies compares to the price-earnings ratio of these companies compares to the price-earnings ratio of other companies?What might be the disadvantage of buying shares in these companies? b) Another roommate says she only buys shares In companles that are cheap ,whlch she measures by a low price-earnings ratlo.How do you suppose the earnings prospects of these companles compare to those of other companles? What mlght be the disadvantage of buylng shares In these companles?

You have two roommates who invest in the stock market 7a.JOne roommate says she buys shares only in companies that everyone believes will experience big increases in profits in the future. How do you suppose the price-earning ratio of these companies compares to the price-earnings ratio of these companies compares to the price-earnings ratio of other companies?What might be the disadvantage of buying shares in these companies? b) Another roommate says she only buys shares In companles that are cheap ,whlch she measures by a low price-earnings ratlo.How do you suppose the earnings prospects of these companles compare to those of other companles? What mlght be the disadvantage of buylng shares In these companles?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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