A company with a high P/E ratio will have a ____ earnings yield.

Question

Quizplus · Accepted Answer

The P/E ratio measures how many times greater the market price is than the earnings per share. A high P/E ratio means that the market price is high relative to earnings per share. Therefore, a high P/E ratio implies a low earnings yield, which is the inverse of the P/E ratio. A low earnings yield means that the company's earnings are generating a lower return for investors based on the market price.

A Company with a High P/E Ratio Will Have a ____