PE: The reason for choosing the Price-Earning Ratio is because this number tells you how many years worth of profits youre paying for a stock. Rapidly growing companies often have high PE ratios, for the opposite reason. Investors are more willing to pay a premium when they expect strong future profits. Tesla and Paypal are two examples, with PE multiples of 50 and 36, respectively. (Dobosz,2023) PEG: The reason for choosing the Price/Earnings Growth Ratio is because it attempts to measure the discount or premium youre paying for growth. A PEG ratio of less than 1 suggests the company is undervalued. (Doosz,2023). 

Assume you are an investor. Often ratios can be misleading. What did you like about the ratio covered, and what would you like to learn about the ratios covered? Explain.

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It seems youve described the PriceEarning PE Ratio and the PriceEarnings Growth PEG Ratio and are asking about the advantages and potential drawbacks ... View the full answer