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Basic Question 7 of 11

A company with a high P/E ratio is expected to ______

A. go bankrupt.
B. underperform the market.
C. grow faster than the market.
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User Contributed Comments 1

User Comment
khalifa92 the dividends displacement of earnings phenomenon
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I used your notes and passed ... highly recommended!
Lauren

Lauren

Learning Outcome Statements

explain the rationale for using price multiples to value equity, how the price to earnings multiple relates to fundamentals, and the use of multiples based on comparables

calculate and interpret the following multiples: price to earnings, price to an estimate of operating cash flow, price to sales, and price to book value

CFA® 2025 Level I Curriculum, Volume 3, Module 8.