CFA Practice Question

There are 191 practice questions for this study session.

CFA Practice Question

A company with a high P/E ratio is expected to ______

A. go bankrupt.
B. underperform the market.
C. grow faster than the market.
Correct Answer: C

A high P/E is associated with firms having high expected growth rates. Investors are willing to pay a high price relative to EPS. A high P/E can be the result of a bull market or a decline in EPS.

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khalifa92 the dividends displacement of earnings phenomenon
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