The reason price-earnings ratios and inflation are related is because as
A) As inflation increases,the required return in the market rises pushing down the prices of securities
B) As inflation increases,the required return in the market rises pushing up the prices of securities
C) As price-earnings ratios fall,the market changes its expectations about the future rate of inflation
D) As price-earnings ratio rise,the market anticipates that inflation will decrease,sending stock prices higher
Correct Answer:
Verified
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