What is a potential risk of relying solely on the P/E ratio for investment decisions? Option: "The stock may be overvalued", "The stock price may be highly stable", "The P/E ratio guarantees future profitability", "The stock may be undervalued"

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What is a potential risk of relying solely on the P/E ratio for investment decisions?

"The stock may be overvalued"

"The stock price may be highly stable"

"The P/E ratio guarantees future profitability"

"The stock may be undervalued"

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What is a potential risk associated with relying solely on the P/E ratio?

Earnings can be manipulated

P/E ratios are difficult to calculate

P/E ratios fluctuate too frequently

P/E ratios are not publicly available

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What does a high P/E ratio suggest about a company's stock?

"It has high dividend payouts"

"It is overvalued"

"It is a low-risk investment"

"It is undervalued"

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What does a high P/E ratio generally suggest about investor sentiment towards a company?

"Investors are optimistic about the company's future earnings"

"Investors are pessimistic about the company's future earnings"

"Investors are neutral about the company's future earnings"

"Investors are uncertain about the company's future earnings"

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Why is it crucial to conduct thorough research beyond just considering the P/E ratio?

"P/E ratios provide a complete picture of a company's financials"

"External factors can influence stock prices, not just company performance"

"Fundamental analysis is unnecessary for high P/E stocks"

"High P/E ratios always indicate strong future performance"

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What does the P/E ratio help investors understand?

"The company's debt level compared to its equity"

"The profitability of a company compared to its stock price"

"The market price of a share in relation to the company's earnings"

"The book value of a company's assets relative to its market value"