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The ABC and XYZ companies operate in the same industry. Company ABC has a P:E ratio of 18 times, whereas the XYZ Company has a
The ABC and XYZ companies operate in the same industry. Company ABC has a P:E ratio of 18 times, whereas the XYZ Company has a P:E ratio of 8 times. This implies that:
A. | investors are more optimistic about the prospects of the ABC Company.
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B. | investors are more optimistic about the prospects of the XYZ Company.
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C. | investors are indifferent to the two companies.
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D. | investors are willing to pay more for the shares of the XYZ Company than for those of the ABC Company. |
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