High P/E ratios can be expected when investors expect
A) a high rate of growth in earnings.
B) low earnings. relative to market prices.
C) high interest rates.
D) a bear market.

Question

Quizplus · Accepted Answer

High P/E ratios are typically expected when investors anticipate a high rate of growth in earnings, as they are willing to pay more for each dollar of earnings in expectation of future growth.

High P/E Ratios Can Be Expected When Investors Expect