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17 April, 17:36

A high level of expected risk suggests a low price-earnings ratio.

a. True

b. False

+2
Answers (1)
  1. 17 April, 18:46
    0
    Price-earnings ratio is calculated by dividing the market price of the stock by its Earnings per share (EPS). A high level of expected risk suggests a lower level of EPS as compared with the Market price; hence the Price-earnings ratio shall be higher.

    Hence, the given statement "A high level of expected risk suggests a low price-earnings ratio" is false.

    The answer is b. False.
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