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5 July, 22:31

A lower than average PE may mean that the market expects earnings to rise in the future.

True / False.

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  1. 6 July, 00:16
    0
    False

    Explanation:

    PE ratio is used to determine what investors are willing to pay to receive one dollar of a company's earnings. This price they are willing to pay is based on past and expected future earnings. It is calculated by dividing the market price per share by the earnings per share. A higher average PE means that investors are expecting earnings growth to be higher whereas a lower PE means that they are expecting the future earnings to decrease.
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