All things being equal,if investors expect earnings to increase substantially from current levels,the price/earnings ratio will:

Question

Quizplus · Accepted Answer

If investors expect earnings to increase substantially, they will be willing to pay more for the stock, which will increase the price/earnings ratio. A high P/E ratio indicates high earnings expectations and relatively high stock price, while a low P/E ratio may suggest low earnings expectations and relatively low stock price.

All Things Being Equal,if Investors Expect Earnings to Increase Substantially