The results of studies that have looked at the relationship between PEG ratios and subsequent stock returns

Question

Quizplus · Accepted Answer

Studies have found an inverse relationship between PEG ratios and subsequent stock returns with monthly or quarterly rebalancing, indicating that stocks with low PEG ratios tend to outperform those with high PEG ratios. However, with annual rebalancing, there is a direct relationship between PEG ratios and subsequent stock returns, indicating that stocks with high PEG ratios tend to outperform those with low PEG ratios. Therefore, choice C - an inverse relationship with monthly or quarterly rebalancing - is the best option.

The Results of Studies That Have Looked at the Relationship