Which of the following relationships in the P/E ratio should not hold, other things being equal? A) The higher the expected dividend payout ratio D₁/E₁, the higher the P/E. B) The higher the expected growth rate, g, the higher the P/E. C) The higher the required rate of return, k, the lower the P/E. D) All of the relationships should hold.

Question

Quizplus · Accepted Answer

All the relationships should hold because they are based on the fundamental valuation model where P/E is influenced by dividend payout, growth rate, and required return.

Which of the Following Relationships in the P/E Ratio Should