1. Does a higher p/e ratio tell you that the investing public is optimistic or pessimistic about a company's future growth potential? Why? Use Figure 12.1 

 

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Figure 12.1 Growth of $100 Invested in Different Asset Classes, 1951-2020 $200,000 Investment $100,000 $10,000 $1,000 $100 1950 1960 NYSE Stocks Government Bonds Treasury Bills Inflation 1970 1980 End of Year 1990 2000 2010 $179,788 $6,279 $1,680 $1,035 2020 Once you've made the plunge, you'll want to watch over your investment. Checklist 12.1 provides a number of questions to consider as your investment progresses. Figure 12.1 Growth of $100 Invested in Different Asset Classes, 1951-2020 $200,000 Investment $100,000 $10,000 $1,000 $100 1950 1960 NYSE Stocks Government Bonds Treasury Bills Inflation 1970 1980 End of Year 1990 2000 2010 $179,788 $6,279 $1,680 $1,035 2020 Once you've made the plunge, you'll want to watch over your investment. Checklist 12.1 provides a number of questions to consider as your investment progresses.