If a company's P/E ratio suddenly decreases:
A)you should sell the stock as soon as possible.
B)you should buy more of the stock to increase your average gain.
C)the company probably announced higher earnings forecasts.
D)the market must have reacted to some bad news that is expected to affect the company in the future.

Question

Quizplus · Accepted Answer

The Price/Earnings (P/E)ratio measures how many times more than the current year's earnings investors are willing to pay for a company's common stock.A relatively low P/E ratio typically means that they don't expect strong future performance.

If a Company's P/E Ratio Suddenly Decreases