A firm with a high level of growth opportunities is most apt to have a:
A)high PE ratio and a high EV multiple.
B)high cash ratio and a low EV multiple.
C)high PE ratio and a low EV multiple.
D)low PE ratio and a high EV multiple.
E)low cash ratio and a low PE ratio.

Question

Quizplus · Accepted Answer

Firms with high growth opportunities often have high PE (Price to Earnings) ratios because investors are willing to pay more for the future growth prospects. Similarly, a high EV (Enterprise Value) multiple indicates that the market values the company highly, often due to expected growth.

A Firm with a High Level of Growth Opportunities Is