A company whose stock is selling at a P/E ratio greater than the P/E ratio of a market index most likely has

A) an anticipated earnings growth rate which is less than that of the average firm.
B) a dividend yield which is less than that of the average firm.
C) less predictable earnings growth than that of the average firm.
D) greater cyclicality of earnings growth than that of the average firm.

Market Index

A theoretical portfolio of investments representing a segment of the financial market, used as a benchmark to measure the performance of investments.

P/E Ratio

The Price to Earnings ratio, a valuation metric for stocks calculated by dividing the market price per share by its earnings per share.

Earnings Growth Rate

The annual rate of growth of a company's earnings per share, indicating the company's profitability trend over time.