Which of the following variables does not have a direct relationship with the P/E ratio?
A) dividend payout ratio
B) expected growth rate of dividends
C) expected growth rate of earnings
D) the required rate of return for the company's stock

Question

Quizplus · Accepted Answer

The required rate of return for the company's stock is not a variable that has a direct relationship with the P/E ratio. The P/E ratio is calculated by dividing the current market price of a stock by its annual earnings per share. The dividend payout ratio, expected growth rate of dividends, and expected growth rate of earnings are all variables that can affect the P/E ratio.

Which of the Following Variables Does Not Have a Direct