Firms with an expectation for great potential tend to trade at low P/E ratios.
Price will be driven up by expectations, yet earnings are not yet realized or strong. The numerator is higher, the denominator lower, resulting in a higher P/E.

Question

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Firms with an expectation for great potential tend to trade at low P/E ratios.
Price will be driven up by expectations, yet earnings are not yet realized or strong. The numerator is higher, the denominator lower, resulting in a higher P/E.

Firms with an Expectation for Great Potential Tend to Trade