What does a P/E ratio of 10 indicate??
A. ?It would take 10 years for an investor to recover his or her initial investment.
B. ?The firm will pay a dividend of $10 per share.
C. ?The value of the stock will be 10 times the initial investment at the time of maturity.
D. ?A stock's value will increase by 10 percent every year.
E. ?An investor would receive 10 percent of the total earnings of the firm, at the time of liquidation.
Answer: A
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