A company's price-to-earnings (P/E) ratio reflects the market's perception of future growth prospects and risk.What does a high P/E ratio indicate with respect to each of those factors? $\begin{array}{ll}\text { Future }\\text { Growth} & \text { Risk }\
\text { A) High } & \text { High } \
\text { B) High } & \text { Low } \
\text { C) Low } & \text { High } \
\text { D) Low } & \text { High }
\end{array}$

Question

Quizplus · Accepted Answer

A high P/E ratio indicates that the market expects high future growth and low risk.

A Company's Price-To-Earnings (P/E) Ratio Reflects the Market's Perception of Future