2016年美国CPA练习题精选：Business 3

　　Investors are likely to view a high price earnings （P/E） ratio as an indication that：

　　a. There is no logical conclusion to reach about the relationship between price and earnings

　　b. Earnings have peaked and will likely fall

　　c. Earnings have growth potential

　　d. Earnings have peaked and will remain flat

　　答案：C

　　Explanation

　　Choice “c” is correct. The P/E ratio measures the amount that investors are willing to pay for each dollar of earnings per share. Higher P/E ratios generally indicate that investors are anticipating more growth and are bidding up the price of the shares in advance of performance.

　　Choice “d” is incorrect. High P/E ratios generally indicate investor confidence in earnings growth, not performance that has peaked.

　　Choice “b” is incorrect. High P/E ratios generally indicate investor confidence in earnings growth, not that performance will fall.

　　Choice “a” is incorrect. High P/E ratios give some insight into investor confidence of earnings growth.