A growth equity portfolio and a value portfolio might be characterized:
A)each by their P/E relative to the index P/E; high P/E for growth and lower for value.
B)as earning a high rate of return for a growth security and a low rate of return for value
Security irrespective of risk.
C)low unsystematic risk and high systematic risk respectively.
D)moderate systematic risk and zero systematic risk respectively.
E)None of the above.

Question

Quizplus · Accepted Answer

Growth equity portfolios typically have higher Price-to-Earnings (P/E) ratios compared to the index P/E because they are expected to grow at an above-average rate. Conversely, value portfolios often have lower P/E ratios as they consist of stocks considered undervalued by the market.

A Growth Equity Portfolio and a Value Portfolio Might Be