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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.

B.

investors are more optimistic about the prospects of the XYZ Company.

C.

investors are indifferent to the two companies.

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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