The P/E ratio will ________ if ________.
A) rise; earnings fall
B) equal zero; dividend payments equal earnings
C) fall; capital gains rise
D) rise; interest rates rise
E) rise; dividends rise

Question

Quizplus · Accepted Answer

Dividends are a portion of earnings paid out to shareholders. If dividends rise, it means that earnings are also rising, which will lead to a higher P/E ratio.

The P/E Ratio Will ________ If ________

The P/E Ratio Will If