Which of the following is true?
A)Historically, high P/E or growth stocks have outperformed low P/E or value stocks.
B)Historically, low P/E or value stocks have outperformed high P/E or growth stocks.
C)After adjusting for risk, high P/E or growth stocks and low P/E or value stocks have performed about the same over time.
D)the P/E effect is limited to U.S.stocks.

Question

Quizplus · Accepted Answer

According to historical data analysis, low P/E or value stocks have outperformed high P/E or growth stocks. This is known as the value premium, which has been observed in various markets worldwide. The reason behind this trend is that value stocks are often undervalued by the market and have more room for growth, while growth stocks are typically overvalued and have higher expectations to meet.

Which of the Following Is True