Cleveland Co.'s price/earnings ratio is 15.3. Its closest competitor, Walt, Inc. has a Price/Earnings ratio of 9.4. Which of the following would not be a valid conclusion to draw from a comparison of the two companies' Price/Earnings ratios?
A. Investors believe Cleveland Co. has a brighter future than Walt, Inc.
B. The stock price of Cleveland Co. has been bid up due to rumors of a merger.
C. Cleveland Co.'s stock is overpriced.
D. Cleveland has been more profitable than Walt, Inc.
Answer: D
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