Other things equal,

Name: Other things equal,
Brand: Quizplus
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Question

Other things equal,

Quizplus · Accepted Answer

The P/E ratio is calculated by dividing the market price per share by earnings per share. The required rate of return is the minimum return an investor expects to earn for the risk they are taking. As the required rate of return increases, investors will demand a higher return for every dollar invested, leading to a lower stock price and a lower P/E ratio. Therefore, the higher the required rate of return, the lower the P/E ratio.

Other Things Equal