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Penny's Candies Is Showing a P/E Ratio of 1

Question 44

Multiple Choice

Penny's Candies is showing a P/E ratio of 1.32, while Donna's Confections has a P/E ratio of 6.7. What is the general mood of investors about these companies?


A) It is possible that Donna's is going to explode with growth in the short term. It's a "buy" kind of stock for sure.
B) Investors expect more long­term growth from Donna's than from Penny's.
C) Investors expect more long­term growth from Penny's than from Donna's.
D) Investors should sell stock in Donna's because it will crash in the near future.

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