A high price/earnings (P/E)ratio suggests:
A) Shareholders are pessimistic about future growth prospects
B) Shareholders are optimistic about future growth prospects
C) Earnings per share is high relative to the share price
D) Statements B and C are correct

Question

Quizplus · Accepted Answer

A high P/E ratio indicates that investors are willing to pay a higher price for the stock in anticipation of future growth and earnings. This suggests that shareholders are optimistic about the company's future growth prospects.

A High Price/earnings (P/E)ratio Suggests