The P/E ratio, or multiplier, is a measure of the relative price of a stock. All of the following are true except:

Group of answer choices

If business risk increases for a firm, the P/E ratio will decrease, other things the same.

Other things equal, as the required rate rises, the P/E ratio declines.

A high P/E ratio is justified for a firm if it has a high growth rate.

The P/E ratio is conceptually a function of expected dividend payout ratio, required rate of return, expected growth rate in dividends.

A higher expected payout ratio has a clear-cut positive impact on the P/E ratio