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The price/earnings ratio forms the basis of the earnings method of share valuation when it is applied to either historic or future earnings per share figures. There may be a number of reasons to explain why a company exhibits a higher P/E ratio than the norm for a particular industry/sector in which it operates. Which of the following factors are plausible reasons for a relatively higher P/E ratio? A. The company may have a relatively low risk profile. Earnings are secure. B. The company's shares are readily marketable. C. All statements are correct. D. Good prospects for earnings growth in the future. E. The company concerned is a quoted public company whereas most of the others in the sector are private companies. |