The figure given below shows the demand curves [D 1 and D 2 ] and the supply curve [S 1 ] of capital.Figure 17.1

-If the P/E ratio is equal to 50, it implies that investors in the stock are willing to pay:

Question

The figure given below shows the demand curves [D 1 and D 2 ] and the supply curve [S 1 ] of capital.Figure 17.1
 
-If the P/E ratio is equal to 50, it implies that investors in the stock are willing to pay:

Quizplus · Accepted Answer

The P/E ratio is the price-to-earnings ratio and is calculated by dividing the market price per share of the stock (P) by the earnings per share (E). The P/E ratio in this scenario is 50, which means that investors are willing to pay $50 for every $1 of earnings that the company generates during a period. Therefore, the correct answer is D, which says that investors are willing to pay $50 for every $1 of earnings.

The Figure Given Below Shows the Demand Curves [D1 and D2]

The Figure Given Below Shows the Demand Curves [D₁ and D₂]