A low price-earnings ratio usually indicates that people believe that this corporation will have lower than average growth in earnings.

Question

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A low price-earnings ratio suggests that the stock price is relatively low compared to the earnings per share. This can occur when investors have lower expectations for future earnings growth, which is reflected in the lower stock price. Therefore, a low price-earnings ratio generally indicates that people believe that the corporation's growth in earnings will be lower than average.

A Low Price-Earnings Ratio Usually Indicates That People Believe That