Growth stocks have high expectations of future earnings growth,and therefore,usually trade at higher PE ratios.

Question

Quizplus · Accepted Answer

Growth stocks are companies with high potential for earnings growth in the future, and investors are willing to pay a premium price for such companies due to their expected future growth. This results in high price-earnings (PE) ratios for growth stocks. Therefore, the statement is true.

Growth Stocks Have High Expectations of Future Earnings Growth,and Therefore,usually