The P/E ratio is not determined by
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A. B. C. D.A
The infinite period Dividend Discount Model claims that the current price of a common stock is equal to D1 / (k - g), where D1 is next period's (most often next year's) dividend, k is the required rate of return, and g is the growth rate of dividends. If we divide both sides of the infinite period Dividend Discount Model equation by expected earnings during the next 12 months, we get P/E = (D1/E) / (k - g). This equation shows that the P/E ratio is determined by the expected dividend payout ratio (D1/E), k, and g. ROE does not help determine the P/E ratio.