XYZ Corporation has a P/E ratio of 20 and EFG Corporation has a P/E ratio of 10.
ID: 2636766 • Letter: X
Question
XYZ Corporation has a P/E ratio of 20 and EFG Corporation has a P/E ratio of 10. It is likely that?
investors believe XYZ stock is overvalued.
XYZ's earnings per share are twice the earnings per share of EFG.
investors believe that for the same level of earnings growth, XYZ is a higher risk company.
investors expect XYZ's earnings to grow faster than EFG's earnings.
A.investors believe XYZ stock is overvalued.
B.XYZ's earnings per share are twice the earnings per share of EFG.
C.investors believe that for the same level of earnings growth, XYZ is a higher risk company.
D.investors expect XYZ's earnings to grow faster than EFG's earnings.
Explanation / Answer
The correct answer is Option-D:- investors expect XYZ's earnings to grow faster than EFG's earnings.
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