High P/E firms tend to be poor investments. This illustrates which of the following information processing errors?

Name: High P/E firms tend to be poor investments. This illustrates which of the following information processing errors?
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Question

Quizplus · Accepted Answer

Forecasting error is illustrated by the belief that high P/E firms tend to be poor investments, as it involves making incorrect predictions about the future performance of these firms based on their current price-to-earnings ratios.

High P/E Firms Tend to Be Poor Investments