In Relation to the Price-Earnings Ratio (P/E Ratio), Which Statement

Multiple Choice

In relation to the price-earnings ratio (P/E ratio) , which statement is incorrect?

A) Higher P/E ratios tend to be associated with growth companies.
B) As expectations of future profits increase the P/E ratio tends to fall.
C) It measures how much investors are willing to pay for each dollar of earnings.
D) A P/E ratio of 5.2 means that the shares of the company are selling at 5.2 times current profits.