Lannister Corp. has a price earnings ratio of 17 and a dividend yield of 0.33%. Frey Corp. has a price earnings ratio of 14 and a dividend yield of 3%. Based on this information, it appears that investors think:

Question

Quizplus · Accepted Answer

The price earnings ratio (P/E ratio) is often used as an indicator of how much investors are willing to pay for each dollar of earnings generated by a company. A higher P/E ratio can indicate that investors have higher expectations for future growth and profitability.

In this case, Lannister Corp. has a higher P/E ratio of 17 compared to Frey Corp.'s P/E ratio of 14. This suggests that investors may have higher expectations for Lannister's future growth and profitability.

However, Frey Corp. has a higher dividend yield of 3% compared to Lannister's 0.33% dividend yield. This suggests that Frey may be a more established and stable company with a higher percentage of earnings returned to investors as dividends.

Overall, it appears that investors believe both companies have a bright future, but Lannister may be expected to grow more than Frey based on the higher P/E ratio. Therefore, the best answer is C.