which of the following statements is FALSE? A) the most common valuation multipl

Question

which of the following statements is FALSE?

A) the most common valuation multiple is the price-earnings ratio

B) you should be willing to pay proportionally more for a stock with lower current earrings

C) a firm's price-earnings ratio is equal to the share prive divided by its earnings per share

D) the intuition behind the use of the price-earnings ratio is that when you buy a stock, you are in a sense buying the rights to the firm's future earnings, and differences in the scale of firm's earnings are likely to persist.

Explanation / Answer

Hi,

Please find the answer as follows:

Option B (you should be willing to pay proportionally more for a stock with lower current earrings) is correct.

Thanks.

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