Which company has the most risk from an investor's standpoint? Firm A has a PE of 92 times and Firm B has a PE of 16 times. Assume both firms operate in the same industry. Firm A has fewer shares outstanding than Firm

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A higher PE ratio indicates that investors are willing to pay more for each dollar of earnings, which implies high growth expectations for the company. This also means that there is a higher risk associated with meeting those expectations. Furthermore, the fact that Firm A has fewer shares outstanding does not necessarily increase its risk as it is just a matter of the capital structure of the company.

Which Company Has the Most Risk from an Investor's Standpoint