The value of the price-earnings ratio is affected by:

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The price-earnings ratio is affected by all of the above factors. The earnings period used for its calculation will obviously have an impact on the ratio, as will expected growth in earnings per share. Overall conditions in the stock market can also influence the P/E ratio. For example, during a bull market where stocks are experiencing strong growth and investor sentiment is high, the P/E ratio tends to be higher. Inflationary expectations can also impact the P/E ratio, as higher inflation would likely lead to higher interest rates, which could in turn increase the cost of borrowing for companies and impact their earnings.

The Value of the Price-Earnings Ratio Is Affected By