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Typically firms with low Price/Earnings ratio have high MV/BV ratios. True or False?

Typically firms with low Price/Earnings ratio have high MV/BV ratios. True or False?

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Answer #1

Price / Earning Ratio = Market Value price per shares / Eearning Per Shares

this ratio will represents the market value of a stock relative to its earnings by comparing the market price per share by the earnings per share. In other words, the price earnings ratio shows what the market is willing to pay for a stock based on its current earnings. Low P/E ratios will indicate ther is less earning and less dividend to the common share hokders and it will reduce the lower the market value of the shares.

So as per the above the given statement is false,

Answer = False

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