Investors are willing to purchase stocks having high P/E ratios because:

Question

Quizplus · Accepted Answer

Investors are willing to purchase stocks having high P/E ratios because they expect these shares to have greater growth opportunities. A high P/E ratio indicates that investors are willing to pay a higher price for the stock relative to its earnings because they expect the company to grow and generate higher earnings in the future. Therefore, a high P/E ratio can be seen as an indicator of investor confidence in the company's growth prospects.

Investors Are Willing to Purchase Stocks Having High P/E Ratios