Would a relatively high P/E ratio lead us to conclude that a stock is overvalued or undervalued? Why or why not?
If a stock's price to earnings ratio is higher than other firms in the industry, that stock could be considered overvalued. However, the higher ratio may be an indication that the market expects the company's performance to improve significantly in the future.
You might also like to view...
A tax cut ________ aggregate demand and ________
A) decreases; shifts the AD curve rightward B) increases; shifts the AD curve leftward C) increases; shifts the AD curve rightward D) decreases; shifts the AD curve leftward E) does not change; does not shift the AD curve
The perfectly competitive firm's supply curve is:
a. that portion of the marginal cost curve which intersects and rises above the average total cost curve. b. that portion of the marginal cost curve which intersects and rises above the average variable cost curve. c. the entire marginal cost curve. d. the rising portion of the average variable cost curve.