Which One of the Following Statements Is True Concerning the Price-Earnings

Multiple Choice

Which one of the following statements is true concerning the price-earnings (PE) ratio?

A) A high PE ratio may indicate that a firm is expected to grow significantly.
B) A PE ratio of 16 indicates that investors are willing to pay $1 for every $16 of current earnings.
C) PE ratios are unaffected by the accounting methods employed by a firm.
D) The PE ratio is classified as a profitability ratio.
E) The PE ratio is a constant value for each firm.