Asked by hector batalla on May 05, 2024
Verified
A high price-earnings ratio means that investors are willing to pay a premium for the company's stock.
Price-Earnings Ratio
A valuation ratio of a company's current share price compared to its per-share earnings.
Investors
Individuals or entities that allocate capital with the expectation of receiving financial returns.
Premium
An amount paid in addition to the standard or original price, often for insurance, bonds, or faster service.
- Grasp the relationship between market valuations like the price-earnings ratio and underlying financial performance metrics.
Verified Answer
PS
Pranav SainiMay 10, 2024
Final Answer :
True
Explanation :
A high price-earnings ratio indicates that investors have high expectations of the company's future earnings potential and are willing to pay more for the stock based on those expectations.
Learning Objectives
- Grasp the relationship between market valuations like the price-earnings ratio and underlying financial performance metrics.
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