A Company Whose Stock Is Selling at a P/E Ratio

A company whose stock is selling at a P/E ratio greater than the P/E ratio of a market index most likely has

A) an anticipated earnings growth rate which is less than that of the average firm.
B) a dividend yield which is less than that of the average firm.
C) less predictable earnings growth than that of the average firm.
D) greater cyclicality of earnings growth than that of the average firm.

Correct Answer:

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