Dose high price equal high quality
高价格与高品质英语作文
高价格与高品质英语作文Title: The Interplay of High Prices and High Quality。
In today's consumer-driven world, the relationship between price and quality is a topic of perpetual debate. Some argue that higher prices equate to higher quality, while others contend that quality can be achieved at lower costs. Let's delve into this intricate relationship and explore the nuances that define it.To begin with, it's essential to acknowledge that price and quality are not always directly correlated. While it's true that premium products often come with a hefty price tag, this doesn't necessarily guarantee superior quality. Conversely, there are instances where reasonably priced items boast exceptional quality. Therefore, it's simplistic to assume a linear relationship between price and quality.One factor that contributes to the perception ofquality is branding. Established brands often commandhigher prices due to their reputation for excellence. Consumers are willing to pay a premium for these brands because they trust their track record of delivering superior products. However, this association between price and quality can sometimes be misleading, as brand recognition doesn't always translate to tangible improvements in product quality.Another aspect to consider is craftsmanship and materials. Certain products require meticulous attention to detail and the use of high-quality materials, which naturally drives up their cost. Artisanal goods, for example, often come with a higher price tag because of the skill and effort invested in their creation. Similarly, products made from premium materials such as genuineleather or organic ingredients tend to be more expensive due to their inherent quality.Moreover, research and development play a crucial role in determining product quality. Companies that invest in innovation and technology often produce superior goods that justify their higher prices. Cutting-edge features,advanced manufacturing techniques, and rigorous quality control measures all contribute to the perceived value of a product. Consequently, consumers are willing to pay morefor these innovations, confident that they are getting the best possible quality.However, it's worth noting that price isn't always indicative of quality, especially in a competitive market. Some brands deliberately inflate their prices to create an aura of exclusivity or to capitalize on consumer perceptions of prestige. In such cases, consumers may be paying more for the brand's image rather than the actual quality of the product. Additionally, aggressive marketing tactics can influence perceptions of quality, leading consumers to believe that higher-priced items areinherently better.In conclusion, while there is undoubtedly a correlation between price and quality, it's essential to approach this relationship with discernment. Price alone should not be the sole determinant of quality, as factors such as branding, craftsmanship, materials, and innovation allcontribute to the perceived value of a product. Ultimately, consumers should conduct thorough research and consider various factors before making purchasing decisions, ensuring that they get the best possible value for their money.。
人教版英语必修一Unit5词汇
【拓展】
out of breath out of use out of order out of control out of danger out of sight out of date 上气不接下气 没用了 出故障了 失控了 脱离危险了 看不见了 过时
• vote • （1） 投票；表决 • Congress voted to increase foreign aid by 10%. • （2） n. [C] 投票，表决 • The result of the vote were surprising. • 拓展： • vote to do sth 投票做某事 • vote for sb 投票支持某人 • vote against sb 投票反对
• • • • • • • • •
（3）adj. 熟练的；出色的 搭配： be no mean 了不起，很出色 He is a mean tennis player. His mother was a painter, and he is no mean artist himself. （4） vt. 意思是；意味着；表示……意思 搭配： mean to do sth 打算做某事 mean doing sth 意味着；意思是 But I didn’t mean to hurt you. Missing the bus means walking home.
Unit 5 Words
• • • • • • •
quality n. （1） [U,C]质，质量，品质 Quality is more important that quantity. （2）[C]性质，特性，特点 One quality of wood is that it can burn. （3）[C]品德，品性 You need some special personal qualities to work as a nurse.
高品质高价格英语作文
高品质高价格英语作文High Quality and High Price。
In today's consumer-driven society, the pursuit of high quality often comes with a high price tag. Whether it's a luxury car, a designer handbag, or a gourmet meal, the best of the best often comes at a premium. This phenomenon isnot limited to material goods, but also extends to services, experiences, and even relationships. In this essay, we will explore the reasons behind the high price of high quality and its implications for individuals and society as a whole.First and foremost, the high price of high quality can be attributed to the superior craftsmanship, materials, and attention to detail that are required to produce a superior product or service. For example, a luxury car may be handcrafted with the finest leather, wood, and metal, and undergo rigorous quality control measures to ensure that every detail is perfect. Similarly, a five-star restaurant may use only the freshest, highest quality ingredients andemploy top chefs to create culinary masterpieces. These high standards of production and service naturally result in higher costs, which are then passed on to the consumer.Furthermore, the high price of high quality is also a reflection of the exclusivity and prestige that comes with owning or experiencing the best. Luxury brands often limit the production of their products to maintain their exclusivity, and lavish experiences such as private yacht cruises or exclusive resort stays are reserved for those who can afford to pay top dollar. This exclusivity creates a sense of prestige and status for those who can afford it, and contributes to the high price of high quality.In addition, the high price of high quality is also influenced by the market demand and consumer perception of value. Consumers are willing to pay a premium for high quality products and services because they believe that they are getting something that is superior, exclusive, and worth the extra cost. This perception of value is often reinforced by marketing and branding efforts, which create an aspirational image around high quality goods andexperiences. As a result, the demand for high quality products and services remains strong, allowing companies to justify their high prices.Despite the high cost, there are several benefits to choosing high quality products and services. For one, high quality goods and experiences often provide superior performance, durability, and satisfaction compared to their lower quality counterparts. A well-crafted piece of furniture, for example, may last for generations, while a cheap, mass-produced alternative may quickly fall apart. In the same vein, a gourmet meal at a top restaurant can provide a memorable and satisfying dining experience thatis worth the extra cost. Furthermore, high quality products and services often come with better customer service, warranties, and support, providing added value to the consumer.On a societal level, the pursuit of high quality and the willingness to pay a premium for it can also drive innovation, creativity, and excellence. Companies that produce high quality goods and services are often motivatedto push the boundaries of design, technology, and performance in order to differentiate themselves from their competitors. This pursuit of excellence can lead to advancements in various industries, benefiting consumers and society as a whole. Moreover, the high price of high quality can also create jobs and support local economies, as luxury brands, high-end restaurants, and premium service providers often require skilled labor and resources to maintain their standards.In conclusion, the high price of high quality is a reflection of superior craftsmanship, materials, exclusivity, and consumer perception of value. While it may come with a steep cost, choosing high quality products and services can provide superior performance, satisfaction, and value. Furthermore, the pursuit of high quality can also drive innovation, creativity, and excellence in various industries, benefiting consumers and society as a whole. Ultimately, the decision to invest in high quality goods and experiences is a personal one, but it is clear that the benefits can outweigh the costs.。
2023年大学英语六级作文范文
2023年大学英语六级作文范文2023年大学英语六级作文范文大学英语六级作文在英语六级考试中占整套试卷的15% ，即106.5分，重要性不言而喻。
因此，考生在考前要多看一些英语六级作文预测等相关内容。
下面是应届毕业生考试网为大家整理的`2023年大学英语六级作文范文，希望对各位考生有一定的帮助。
2023年大学英语六级作文范文一Should We Help the old People Up from a Fail?1.是否应该去扶跌倒的老人引起了剧烈的争论2.出现这种现象的原因3.我的观点高分范文Should We Help the Old People Up from a Fall?As regards whether we should help the old people up from a fall，there has been a heated discussion among the public in our society.As far as I'm concerned，such tragedies should never occur.Firstly，to achieve it，the behavior ofhelping the aged people in need should beadvocated.More importantly，efforts should be made to protect the benefits of those who give help.Only in this way can we make sure that， on the one hand，the old people receive timely aid，and on the other hand，warmhearted people never suffer from loss.2023年大学英语六级作文范文二Does High Price Equal High Quality?1.有的人认为高价格等于高品质2.也有人表示反对3.在我看来......4.高分范文Does High Price Equal High Quality?When asked about how to differentiate good products from bad ones， quite a number of people take it for granted that high price equals highquality.Confronted with uncertainty about theintrinsic value of the products.consumers simply use the rule of thumb that they understand.They believethat highquality products need high cost，resulting in high price.In a word，price reflects quality.However.others who hold the opposite opinion argue that there is no necessary one-to-one correspondence between quality and price.Having been exposed to news about fake products and fraud, many customers e to realize that salesmen also charge high price for low-quality products.They are supported by a recent case that a famous luxury furniture brand is found to cheat customers with low-quality products.As far as I’m concerned.on ly when business is transparent，honest and free from deception，can high price equal high quality.Therefore，in the current circumstance，we can't determine the quality of one product solely by its price.。
高价格等于高品质英语作文
高价格等于高品质英语作文英文回答：The assumption that high prices always equate to high quality is a common misconception that often leads to erroneous purchasing decisions. While it is true that some high-priced items may indeed be of superior quality, this correlation is not universally applicable. Numerous factors contribute to the price of a product, including production costs, marketing expenses, and brand reputation, which are not necessarily indicative of its quality.In many cases, the inflated prices of certain goods are simply a reflection of their exclusivity or status symbol appeal rather than their intrinsic worth. Consumers may be willing to pay a premium for products that signal their wealth, prestige, or membership in a particular social group, regardless of their actual value. This phenomenon is particularly prevalent in luxury markets, such as fashion, jewelry, and automobiles, where brands have successfullycultivated an image of exclusivity and desirability that commands a high price point.Furthermore, it is important to recognize that subjective factors, such as personal preferences and perceptions, play a significant role in determining what constitutes "high quality." What one person may find desirable and worth paying a premium for, another may find mediocre and not worth the additional expense. Quality is often a matter of individual judgment and cannot be objectively quantified or measured solely by price.Therefore, while price can sometimes be a rough indicator of quality, it is not a reliable or foolproof measure. Consumers should exercise caution and conduct thorough research before making purchasing decisions based solely on price. By evaluating product reviews, consulting with industry experts, and comparing similar products, consumers can make informed choices that align with their individual needs and preferences, regardless of the price tag.中文回答：价格高就等于质量高吗？价格高就等于质量高的假设是一个常见的误解，经常导致错误的购买决定。
高三全球化与环境问题英语阅读理解20题
高三全球化与环境问题英语阅读理解20题1<背景文章>Globalization has had a profound impact on the environment in recent decades. With the acceleration of the industrialization process, globalization has led to a significant increase in the consumption of natural resources worldwide. Multinational corporations, in their pursuit of economic benefits, often expand their production on a global scale. This has led to a large - scale exploitation of resources in many developing countries. For example, in some African countries, there has been excessive mining of minerals to meet the global demand for various products, which not only depletes local resources but also causes serious damage to the local ecological environment.In addition, globalization has also brought about problems in resource allocation. Developed countries, with their advanced technologies and strong economic strength, tend to occupy a large proportion of high - quality resources. This unequal resource allocation further exacerbates environmental problems in developing countries. For instance, developed countries may import large amounts of timber from developing countries at a relatively low price, which may lead to deforestation in developing countries.Another serious issue is trans - national pollution. Due to the globalization of production and trade, pollutants can easily cross national boundaries. For example, some industrial waste from developed countries may be transferred to developing countries through illegal means for disposal. This not only pollutes the environment of developing countries but also has a negative impact on the global ecological balance. In conclusion, globalization has both positive and negative impacts on the environment, and it is crucial to find a balance between economic development and environmental protection in the context of globalization.1. What is the main idea of this passage?A. Globalization only has negative impacts on the environment.B. Globalization has both positive and negative impacts on the environment.C. Globalization has no impact on the environment.D. Globalization only benefits developed countries in terms of the environment.答案：B。
外贸函电试题库一
外贸函电试题1一、单项选择题（本大题共20小题，每小题1分，共20分）在每小题列出的四个备选项中只有一个是符合题目要求的,请将其代码填写在答题纸相应的位置上。
错选、多选或未选均无分。
1. We are sure that our new products may be ______ particular interest to you.A. onB. ofC. inD. for2. The L/C should be issued through a third country bank in America ______ the seller.A. available byB. available toC. acceptable byD. acceptable to3. Any ______ information about their financial standing will be valued by us.A. detailedB. detailC. partD. particularly4. We enclose our invoic e amounting to USD2300.00 ______ the first consignment per s.s. “Haihe”.A. includeB. payingC. coveringD. compose5. During business, the party who makes payment based on the draft is called ______.A. drawerB. draweeC. beneficiaryD. applicant6. We find it ______ that you failed to delivery the goods before our selling season .A. regretB. regretfulC. regrettableD. regretted7. Our Green Tea is customarily packed ______ standard boxes, 10 boxes to a carton.A. inB. withC. ofD. to8. We are ______ your letter of January 8 and will duly act on your instruction.A. upon receipt ofB. in receipt ofC. receiveD. to receive9. we will keep you ______ for any change in price or delivery.A. informB. to informC. informingD. informed10. Your application for an import license will be rejected ______ you make the mistake again.A. ifB. as long asC. on condition thatD. provided that11. The automatic washing machines ______ Order No.AE953 are now ready for shipment.A. onB. atC. aboveD. under12. We should be glad if you would send us , ______ 30 days’ approval, a selection of your rugs.A. atB. onC. forD. with13. The clocks you required are out of stock now, we have put your items on ______order.A. trialB. delayC. backD. repeat14. We require the goods be delivered in two equal ______ by direct steamer.A. weightsB. sizesC. colorsD. lots15. The letter of credit in our ______ is advised by Bank of China, Zhejiang Branch.A. paymentB. desireC. favorD. choice16. Our best quality products will find a ready ______ in your area.A. marketB. orderC. customerD. consignment17. A franchise of 5% means claims are payable only for the part of the loss ______ 5%.A. aboveB. belowC. equal toD. of18. We confirm ______ your counter-offer yesterday.A. to acceptB. having acceptedC. acceptedD. accepting19. We feel confident that your orders will be ______ smoothly.A. doneB. executedC. madeD. affected20. To our regret, we find the machines arrived to our port ______ such a bad condition.A. inB. onC. atD. by二、填空题（本大题共25空，每空1分，共25分）请将答案填在答题纸相应的位置上。
2014年6月英语六级真题及答案
2014年6月英语六级真题及答案全面的！请好评哦！PartI Writing ( 30minutes)Directions: For this part, you are allowed 30 minutes to write an essay explaining why it is unwise to put all your eggs in one basket. You can give examples to illustrate your point .You should write at least 150 words but no more than 200 words.Directions: For this part, you are allowed 30 minutes to write an essay explaining why it is unwise a person by their appearance. You can give examples to illustrate your point .You should write at least 150 words but no more than 200 words.Directions: For this part, you are allowed 30 minutes to write an essay explaining why it is unwise to jump to conclusions upon seeing or hearing something. You can give examples to illustrate your point .You should write at least 150 words but no more than 200 words.Part Ⅱ Listening Comprehension (30 minutes)Section A Directions:In this section,you will hear 8 short conversations and 2 long conversations.At the end of each conversation, one or more questions will be asked about what was said.Both the conversation and the questions will be spoken only once.After each question there will be a pause.During the pause,you must read the four choices marked A),B),C)and D),and decide which is the best answer.Then mark the corresponding letter on Answer Sheet1 with a single line through the centre.注意：此部分试题请在答题卡1上作答。
外贸英语之支付篇
外贸英语之支付篇第一篇：外贸英语之支付篇商务英语之外贸英语付款篇之一付款工具以及托收和汇付这个月末以前应该付款。
Payment should be effected before the end this month用英镑付款较方便。
It is convenient to pay in pound sterling.至于付款，我们已同意用美圆，对吗？Now, as regards to payment, we agreed to use us dollars, am I right?用日圆付款可能会有困难。
It is difficult to make payment in janpanese yen.我从未用过人民币付款。
I have never made payment in renminbi before.我们不能接受延期付款。
I never accepted payment on deferred terms.你们拒付的理由是什么？What's your reason for the refusal of payment?托收款未得照付。
Collection is not paid.我们相信你们不会拒付。
We don't think you'll refuse to pay.银行只接受一次拒付。
Only one refusal of payment is acceptable to the bank.如果拒付错了，你们应该偿付我方的银行利息。
You ought to pay us the bank interest once payment is wrongly refused.见不到货物装船单据，我们不付款。
We will not pay until the shipping documents for goods are reached us.设备以我们工厂生产的产品分期偿还.The equipment will be paid in installment with the commodities produced in ourfactories.我们担心市场价格下跌会引起拒付。
does high price equal high quality
Does high price equal high qualityAs we all know, the commodity price is the measure of the amount of socially necessary labor time. The more labor time it takes the high price it is. So it is commonly acknowledged that high quality products tend to mean high cost. Correspondingly, does high price equal high quality, which is much talked by the whole society. As to this argument, people take different attitude.Some people insist that high quality goods need to spend more time and effort for processing and deserve a high price correspondingly. They just stubbornly believe that high price respect high quality. On contrast, some person do not agree with this point of view. They consider that you possibly buy a shoddy product in a high price. For example, a lot of rich person would spend tremendous money to buy a luxury. That means the price of the good is not equal with it’s quality. It seems to me that the high price not means high quality. We can get information from some reports showed that the price is high,but the quality is poor occasionally.Take all these views into consideration, we come to a conclusion that price is not a primary factor. High price does not equal with high quality. We can always find some commodity that is cheap and fine. We can not just pursue a high price and ignore its quality.。
高价格等于高品质吗六级英语作文
高价格等于高品质吗六级英语作文High price does not necessarily equal high quality.There are many factors that contribute to the price of a product, and quality is just one of them. While it is true that some high-quality products come with a high price tag, it is also possible to find high-quality products at alower price point.First and foremost, the brand name and reputation of a company can significantly impact the price of a product. Companies with a strong brand presence and a history of producing high-quality items often charge a premium fortheir products. This is because consumers are willing topay more for a brand they trust and believe will deliver a superior product. However, this does not always mean thatthe quality of the product matches the price.Another factor that can drive up the price of a productis the cost of production. If a product requires expensive materials, intricate manufacturing processes, or skilled labor, the price will reflect these expenses. However, this does not guarantee that the product will be of high quality. It simply means that the production costs are high.Furthermore, marketing and packaging can also contribute to the price of a product. Companies often invest a significant amount of money in marketing campaigns and eye-catching packaging to make their products stand out. These costs are passed on to the consumer, but they do not necessarily indicate a higher quality product.In conclusion, while high price can sometimes be an indicator of high quality, it is not always the case. Consumers should carefully consider all aspects of a product, including brand reputation, production costs, and marketing, before assuming that a high price equals high quality.高价格不一定等于高品质。
高价格等于高质量吗英语作文
高价格等于高质量吗英语作文Many people tend to believe that a high price tag automatically equals high quality. But let's face it,that's not always the case. Sometimes, you're just paying for the brand name or the fancy packaging.For instance, I remember this fancy pair of shoes I saw in a store. They were priced sky-high, but when I tried them on, they felt no different from a pair I had boughtfor half the price. It's crazy how some brands can charge so much just for their logo.On the other hand, there are products that are genuinely worth the money. High-end cameras, for example, often come with top-notch technology and features that justify their hefty price tags. But even then, it's not always about the price; it's about what you need and what fits your budget.Another thing to consider is that quality can besubjective. What one person considers top-notch might be basic for another. So, before you shell out big bucks for something, ask yourself: Do I really need this? Is it worth the investment?。
高价格等于高品质作文英文
高价格等于高品质作文英文下载温馨提示:该文档是我店铺精心编制而成，希望大家下载以后，能够帮助大家解决实际的问题。
文档下载后可定制随意修改，请根据实际需要进行相应的调整和使用，谢谢!并且，本店铺为大家提供各种各样类型的实用资料，如教育随笔、日记赏析、句子摘抄、古诗大全、经典美文、话题作文、工作总结、词语解析、文案摘录、其他资料等等，如想了解不同资料格式和写法，敬请关注!Download tips: This document is carefully compiled by theeditor. I hope that after you download them,they can help yousolve practical problems. The document can be customized andmodified after downloading,please adjust and use it according toactual needs, thank you!In addition, our shop provides you with various types ofpractical materials,such as educational essays, diaryappreciation,sentence excerpts,ancient poems,classic articles,topic composition,work summary,word parsing,copyexcerpts,other materials and so on,want to know different data formats andwriting methods,please pay attention!High price does not always equal high quality. In fact, sometimes it's just a marketing strategy to make people believe that they are getting something better when they pay more. But the truth is, there are plenty of affordable products out there that are just as good, if not better, than their expensive counterparts.I've learned this the hard way when I splurged on a designer handbag, only to have the stitching come loose after a few months. On the other hand, I've also found some amazing deals on clothes and accessories that have lasted me for years without breaking the bank.It's important to do your research and not be swayed by flashy advertising or celebrity endorsements. Just because something is expensive doesn't mean it's worth the price. In the end, it's all about finding the right balance between cost and quality.That being said, there are definitely some things that are worth investing in. For example, a good pair of shoesor a high-quality mattress can make a world of differencein your daily life. But even then, it's possible to find these items at a reasonable price if you know where to look.In conclusion, while it's tempting to equate high price with high quality, it's not always the case. There areplenty of affordable options out there that can rival their more expensive counterparts. It's all about being a savvy consumer and not falling for the hype.。
高价格等于高品质吗六级英语作文
高价格等于高品质吗六级英语作文High Price Equals High Quality?When it comes to the debate over whether high price equals high quality, opinions are divided. Some people believe that a higher price tag indicates better quality, while others argue that price does not always reflect the true value of a product or service. In this essay, we will explore both sides of the argument and consider the factors that contribute to the perception of quality in relation to price.On one hand, it is true that in many cases, a higher price does correspond to higher quality. Premium brands often charge more for their products because they use superior materials, employ skilled craftsmanship, and invest in innovative technology. Consumers are willing to pay a premium for these products because they believe they are getting a superior product that will last longer, perform better, or provide a more luxurious experience. For example, luxury cars, designer clothing, and high-end electronics are often priced higher than their competitors, but they are also known for their superior quality and performance.However, it is important to note that price is not the only indicator of quality. There are many factors that contribute to the perceived value of a product or service, including brand reputation, customer reviews, and personal preferences. In some cases, a lower-priced product may offer comparable quality to a higher-priced alternative, especially if it is produced by a lesser-known brand or uses cost-effective production methods. For example, generic medications are often priced lower than brand-name drugs, but they are required to meet the same safety and efficacy standards.Furthermore, the relationship between price and quality can vary depending on the type of product or service being considered. In some industries, such as technology and fashion, consumers are willing to pay a premium for the latest trends and innovations, regardless of the actual quality of the product. On the other hand, in industries such as food and beverages, consumers may prioritize factors such as taste, freshness, and ethical sourcing over price alone. For example, organic produce and fair-trade coffee are oftenpriced higher than conventional alternatives, but consumers are willing to pay more for these products because they value their health and environmental impact.In conclusion, while it is true that a higher price can often indicate higher quality, it is not always the case. The perceived value of a product or service is influenced by a variety of factors, including brand reputation, customer reviews, and personal preferences. Consumers should consider these factors carefully when making purchasing decisions and not rely solely on price as a measure of quality. Ultimately, the best way to determine the true value of a product is to evaluate its performance, durability, and overall satisfaction, rather than its price tag.。
高价格等于高质量嘛英语作文
高价格等于高质量嘛英语作文The Myth of High Price Equals High Quality.In the world of consumerism, the perception that higher prices equate to superior quality is deeply ingrained. This belief is so pervasive that many people are willing to pay more for a product or service, assuming it offers better value and quality. However, this assumption is not always true, and there are several reasons why high price does not always equate to high quality.Firstly, pricing strategies can be highly subjective and influenced by various factors beyond the actual quality of the product. Marketing techniques, brand recognition, and consumer perception all play a role in determining a product's price. Sometimes, a higher price is simply a result of clever marketing strategies designed to create a perception of exclusivity or luxury. In such cases, the price tag does not necessarily reflect the actual quality or performance of the product.Secondly, high prices can be the result of cost inflation, rather than a direct reflection of quality. Suppliers, manufacturers, and distributors may increase prices due to rising costs of production, transportation, or other overhead expenses. In such cases, the consumer pays more for the product, but the actual quality may remain the same or even decrease.Moreover, quality is often subjective and depends on individual preferences and needs. What one person considers high-quality may not be the same for another. For example, some people may prefer a basic, affordable product that meets their needs, while others may be willing to pay more for a product that offers additional features or a more luxurious experience. Therefore, the perception of quality can vary widely among consumers.Additionally, high prices do not always guaranteebetter customer service or support. Sometimes, companies charge higher prices simply because they can, without necessarily providing better after-sales service orwarranty coverage. In such cases, consumers may find that they are paying more for a product but receiving less in terms of overall satisfaction.Finally, it is important to consider the value for money aspect when considering the price-quality relationship. Sometimes, a product that is priced lower may actually offer better value for money, providing more features, better performance, or longer durability than a higher-priced option. Consumers should always compare products and services based on their specific needs and budget, rather than solely relying on price as an indicator of quality.In conclusion, while high prices may sometimes indicate superior quality, they are not always a reliable indicator. Consumers should be cautious when making purchasing decisions and consider various factors beyond price, such as product features, customer reviews, and overall valuefor money. By doing so, they can make more informed choices and avoid the common misconception that higher prices always equal better quality.。
价格和质量的比较英语作文
价格和质量的比较英语作文When comparing prices and quality, it's essential to strike a balance between cost and value. While a lower price might seem appealing, it doesn't always guarantee good quality. Similarly, a high price doesn't always equate to high quality. Understanding the relationship between price and quality can help consumers make informed decisions.Firstly, it's important to consider the factors that influence price. The cost of materials, labor, and overheads all contribute to the final price of a product. Additionally, factors such as brand reputation and market demand can also impact pricing. 。
On the other hand, quality refers to the standard or level of excellence of a product. This includes factors such as durability, reliability, and performance. High-quality products are often made with better materials and undergo more rigorous testing, which can result in a higherprice.When comparing prices and quality, consumers should consider their needs and budget. For essential items that require longevity and performance, investing in higher quality products may be more cost-effective in the long run. However, for items that are more disposable or have ashorter lifespan, opting for a lower-priced alternative might be more practical.Another aspect to consider is the value proposition ofa product. Value is determined by the perceived benefits of a product relative to its price. A product that offers a high level of quality at a reasonable price is consideredto have good value. Consumers should assess the value proposition of a product based on their own needs and preferences.In conclusion, the relationship between price andquality is complex. While price is an important factor, it should not be the sole determinant of quality. By considering factors such as value, durability, andperformance, consumers can make more informed decisions when comparing prices and quality.。
质量决定价格翻译英语作文
质量决定价格翻译英语作文Title: Quality Determines Price。
In the world of commerce, the relationship between quality and price is fundamental. This dynamic dictates the value proposition of goods and services in the marketplace. Quality determines price, serving as a cornerstoneprinciple in business transactions across various industries.Quality is the intrinsic characteristic that defines the superiority of a product or service. It encompasses aspects such as durability, reliability, performance, and aesthetic appeal. A product or service of high quality not only meets but often exceeds customer expectations, resulting in satisfaction and loyalty. Conversely, inferior quality leads to dissatisfaction and tarnished reputation, ultimately impacting pricing strategies.Price, on the other hand, reflects the monetary valueassigned to a product or service. It is influenced by numerous factors, including production costs, demand and supply dynamics, competition, and perceived value. While price serves as a pivotal determinant of purchasing decisions, it is quality that underpins long-term customer satisfaction and brand reputation.In a competitive market environment, businesses must strike a delicate balance between quality and price to remain viable and profitable. Achieving this balance requires meticulous attention to both product/service design and pricing strategies. Companies that prioritize quality invest in research and development, employ skilled labor, and utilize premium materials to deliver superior offerings. Consequently, such products or services command higher prices, justified by their enhanced value proposition.Take the automotive industry as an example. Automobile manufacturers differentiate their products based on quality attributes such as safety features, fuel efficiency, comfort, and technological innovations. Luxury brands likeMercedes-Benz and BMW are renowned for their uncompromising commitment to quality, reflected in meticulously engineered vehicles equipped with cutting-edge technologies. As a result, these brands command premium prices, appealing to affluent consumers who prioritize performance and prestige.Similarly, in the realm of consumer electronics, companies like Apple have mastered the art of leveraging quality to justify premium pricing. Apple's flagship products, such as the iPhone and MacBook, are synonymous with superior craftsmanship, intuitive design, and seamless integration of hardware and software. Despite being priced higher than their competitors, Apple products enjoy unwavering demand due to their unparalleled quality and user experience.Moreover, the service industry exemplifies how quality influences pricing strategies. High-end restaurants, for instance, differentiate themselves by offering impeccable service, exquisite ambiance, and gourmet cuisine prepared with the finest ingredients. Patrons willingly pay premium prices for such dining experiences, recognizing the valuederived from superior quality in both food and service.Nevertheless, it is essential to recognize that quality does not always translate to exorbitant prices. In many cases, businesses adopt cost-effective strategies todeliver high-quality offerings at competitive prices. This approach involves streamlining production processes, optimizing supply chains, and leveraging economies of scale to reduce costs without compromising on quality. By doing so, companies can appeal to a broader customer base while maintaining profitability.In conclusion, the interplay between quality and price shapes the dynamics of the marketplace, influencing consumer behavior, business strategies, and industry standards. While price reflects the monetary value of a product or service, it is quality that ultimately determines its worth in the eyes of consumers. Businesses that prioritize quality over short-term profits cultivate trust, loyalty, and brand equity, paving the way for long-term success and sustainable growth. As consumers, we mustdiscern the true value of products and services, recognizing that quality is the ultimate arbiter of price.。
品质与价格不对等的英语作文
品质与价格不对等的英语作文英文回答：In the modern marketplace, consumers are constantly faced with a deluge of choices when making purchasing decisions. Two important factors influencing these decisions are product quality and price. While it is generally assumed that higher-quality products command higher prices, this correlation is not always straightforward. In fact, there are numerous instances where products of comparable quality are pricedsignificantly differently, leading to the perception of unequal quality-to-price ratios.There are several factors that can contribute to this disparity. One factor is brand recognition. Well-established brands often have a loyal customer base willing to pay a premium for their products, even if the quality is not significantly different from that of lesser-known brands. This brand loyalty is often built on years ofpositive experiences, effective marketing campaigns, and perceived status or prestige associated with the brand. As a result, consumers may be willing to pay more for products from trusted brands, even if there are cheaper alternatives available with similar quality.Another factor that can affect the quality-to-price ratio is production costs. Some products require more expensive raw materials, specialized labor, or complex manufacturing processes. These higher production costs can be reflected in the final price of the product, even if the quality is not necessarily superior to that of products with lower production costs. Conversely, some products may be manufactured using more efficient or cost-effective methods, allowing producers to offer lower prices while maintaining comparable quality.Marketing and advertising can also play a role in shaping consumer perceptions of quality and price. Companies often invest heavily in marketing campaigns to create a positive image of their products and persuade consumers that they are worth the premium price. This canlead to consumers overestimating the quality of a product and being willing to pay more for it. Conversely, products with less extensive marketing may be perceived as lower quality, even if they are actually comparable in terms of performance and durability.Supply and demand can also affect the quality-to-price ratio. When demand for a particular product is high and supply is limited, producers can increase prices without significantly compromising sales. This can lead to situations where products of mediocre quality are sold at inflated prices due to high demand. In contrast, when supply exceeds demand, producers may be forced to lower prices to attract customers, even if the quality of their products remains high.It is important for consumers to be aware of these factors that can affect the quality-to-price ratio. By considering factors such as brand recognition, production costs, marketing, and supply and demand, consumers can make more informed purchasing decisions and avoid paying excessive prices for products that are not necessarilysuperior in quality.中文回答：品质与价格不对等。
DOES HIGH PRICE EARNINGS RATIO PREDICT
DOES HIGH PRICE EARNINGS RATIO PREDICT FUTURE FALLS OF STOCK PRICE?MARIÁN VOREKUniversity of Economics in PragueFaculty of finance and accounting31 August 2009This paper examines the strategy of value investing and its further possibilities for prediction of stock performance, especially in connection with falls in stock prices. The methodology used is based on the implications of the theory of financial markets and the methodology of fundamental analysis. The value investments analysis prepare estimates of a common stock’s intrinsic value by multiplying the respective multiplier (e.g. P/E, P/S, P/CF, P/BV) times the respective actual quantity of stock’s earnings, sales, cash flow, book value, etc. Price to earnings ratio is one of the most used and frequently discussed. The price earnings ratio and its dynamics are determined by current stock price and by earnings per share. Having tested historic yields of stocks in relation with their level of price earnings ratio, the analysts have discovered that there is a negative correlation between the stock’s yield and its level of price earnings ratio. Consequently, the above outcome has been further developed into a strategy called “the strategy of low price to earnings ratio”. This strategy was subject to the further research of which results have doubted the efficient market theory. The research discovered that the investments into stocks with low price to earnings ratio achieved higher than average returns. Based on the above mentioned methodology and the outcomes of empirical studies, this paper focuses on the other side of that relation, whether the high price to earning ratio predicts the future falls in stock prices and whether the price to earnings ratio could act as an indicator of the coming bear market.Key words: price to earings ratio, P/E, low P/E, high P/E, stocks performance, value investingHopefully, global economy is through or at least close to the end of, recession, which was triggered by U.S. sub-prime mortgage sector in 2007. It seems that almost every world economies were affected by this recession. The university researchers and market analysts search for its causes. Some of them say that the primary causes have arisen from the cheap money policy supported by low interest rates; the other seek it in risk evaluation of derivatives and securitization of assets. The buyers of such derivatives are not able to estimate the corresponding risk level.Nevertheless, recessions are unfavorable part of economy as it develops in cycles. Despite the fact that recessions are being sensed negatively, their presence lead the particular market subjects to more efficient behavior, which contributes to better efficiency of the whole system.This cannot stop scientists who still try to explain how to predict the crisis periods and to find indicators that might predict the crises.IntroductionFinancial crises result in destructive impacts on respective economies (recessions) and deep downfalls of financial markets. Therefore, several authors aim to address the questions regarding factors that cause the crises, ways how to solve them or how to precede them. Researchers concentrate effort to create a conventional model that would propose an explanation and could simulate an economic environment prior to and during the crisis. However, there is yet no general theory that would be able to answer all the questions. Therefore, none of proposed approaches has been accepted yet. This unfavorable outcome may have its roots in very broad foundation, where particular crises may arise from.These considerations end up in other questions whether the crises may even be predicted and whether there are exact indicators/parameters that may detect the thread of these unfavorable market conditions.The financial markets usually anticipate recessions, and thus the first negatively affected. However, some of the financial market turmoils are being triggered without any rational causes and are being driven just by herd behavior of market players.The bearish markets could be characterized with a loss of confidence in market valuation of securities. Hence, all subjects focus on closing of their risk positions and minimal losses which triggers the sale wave resulting in deep fall of security prices. Subsequently, volatility of security prices raises as a result of unsteady foundation in security valuation models.The market researchers and analysts seem to be able forecast the key economic drivers by application of some growth rate during the time of economic growth. However, none of them has ever projected coming declines in advance.This paper points to the well known investment strategies based on value investing theory and its multiples; and searches for its potential reverse application in indicating the financial markets fall in advance.Theoretical FoundationValue investing is an investment theory that derives from the ideas of Ben Graham and David Dodd formed in their text Security Analysis (1934). The main idea involves buying securities whose shares appear underpriced by some of its fundaments1. Such securities might be traded at discounts of book value, sales or earnings multiples. The essence of value investing is buying stocks at less than their intrinsic value, where intrinsic value is the discounted value of all future distributions.This approach has evolved significantly since 1970s. The most successful Graham’s student is Warrant Buffet, who runs Berkshire Hathaway.One of the investments strategies is derived from undervalued basic fundaments which are expected to determine the stock price. This is typical for stocks traded with discount and at low multiples of sales (Price to Sales), book value (Price to Book Value), earnings (Price Earnings) and cash flow (Price Cash Flow). From long term prospective, the investment strategies based on the investments into stocks with low multiples result in comparably higher annual return. Success of these strategies is illustrated on picture below.Picture 1 Annual return of the strategies based on the multiplesSource: 1 Graham, Benjamin (1934). Security Analysis New York: McGraw Hill Book Co., 4Data showed on picture 2 demonstrate the recent development of P/BV, P/E and P/S multiples of indices S&P 500 and PX (index of Prague Stock Exchange) during the current crisis (March 2005 to March 2009). The pictures prove that the multiples are not stable and might indicate economic environment.Picture 2 Development of trading multiples of S&P 500 index and PX index (March 2005 – March 2009)Source: BloombergThere was a decline in trading multiples of S&P 500 and PX prior to the current crisis.The multiples of S&P 500 peaked in summer 2007, when stocks were traded at 3 times multiple of book value, which means that investors valued the company 3 times higher than its accounting value of the equity. Price earnings and sales multiples amounted to 17, 1.6 respectively. Then, in September the trading multiple fell down to 1.8 for book value multiple, 12 for price earnings ratio and 0.6 for sales multiple.The multiples of Czech stock market index PX has developed very similarly to S&P 500. However, the volatility of index PX has been higher and the index peaked earlier at the beginning of 2007.Picture 2 might also illustrate the fact that investors were willing to invest at higher trading multiple in the period prior to crisis. While during the crisis the trading multiples bottomed down.Further in the theory section, the text is focused on one particular measure which is based on ratio of stock price (P) and earnings per share (EPS or E). Price to earnings is an indicator which indicates current mood of investors how much they are willing to pay per unit of company earnings.The stock price and the earnings per share determine the value of the ratio. P/E increases when investors are willing to pay more per unit of earnings while the earnings remain stable. P/E also grows when both the stock price and the earnings per share increase, however, the increase of stock price must be sharper than the increase in the earnings per share. Another scenario of increasing P/E take place, when stock price remain stable despite there is a decrease in the earnings per share. The price earnings ratio does not change when there is a balance between the growth of the stock price and the earnings per share.On contrary, P/E declines when the willingness of investors to pay price per unit falls as well as when the price paid per stock by investors increases in slower pace than the earnings per share, etc.Exhibit 1 Analysis of movements of price earnings ratioPrice earnings Price Earningsper shareAction↑↑→Price earnings ratio increases due to higher price, whileearnings (EPS) remain stable.Investors pay higher price per unit of company earnings. ↑↑↑↑Stock price grows in higher pace than company earnings.Subsequently, this leads to higher P/E.Investors react on growth of company earnings. Investorsmay have high expectations of future growth or overvaluedthe current growth of company earnings.↑→↓Despite a decrease in company earnings the stock priceremains stable.Investors do not react on the decrease of company earnings. ↑↓↓↓Stock price decreases in slower pace than companyearnings.Investors have not reflected full impact of company earningsdecrease into stock price.↑↑↓Stock price increases despite the decrease of companyearnings.Investors do not reflect decrease of company earnings instock price.This very brief attempt points to the fact that the P/E growth might symbolize misbalance between the growth of stock price and growth of company earnings, which might be caused by different expectations of company future.Furthermore, the main specifics of the ratio are derived from profit models and are based on the following equation:P = E / k + Rwhere P stands for stock price,E earnings per share,k discount rate andR is net present value of future growth opportunities2.Based on the preceding formula, P/E ratio might be reformulated as:P/E = 1 / k + R / E.This equation determines further the key drivers of the P/E ratio. On one hand, P/E is positively driven by the future growth opportunities, as already suspected, and negatively by demanded rate of return in denominator set as discount rate.3Thus, one can expect that the companies with high growth opportunities such as IT/IS stocks in 1990s would have high P/E ratios while the P/E of companies with limited growth opportunities such as railroad companies, food chains, airlines, etc. would be dramatically lower4.The low level of P/E might be also explained as a so called effect of neglected companies or effect of small companies. The size of the business is too small, that the analysts do not pay enough attention to analyze it or analyzing it would not be efficient. In many cases, the small companies do not dispose information that would allow reasonable analysis. Nevertheless, this should not be valid for market indices.2 Ross, Westerfield, Jaffe: Corporate Finance, page 1213 Musílek, P.: Financial markets and investment banking, page 2644 This might also explain so called “burst“ of technological stocks in 2001.The second parameter that influences P/E is the discount factor that is related to current interest rate. Hence, it is the current interest rate and its fluctuation which might contribute to volatility of P/E.Due to simplicity of P/E ratio, authors, researchers and investment public form various types of it. Differences amongst them arise from time coincidence between the earnings per share and current price, resp. substituted by intrinsic value of the stock. Other approach that differentiates this ratio and is derived from intrinsic value calculation uses different earnings. These might be either current earnings or expected earnings. The expected might be calculated from a formula that is based on the last published earnings and one from the following: earnings growth rate, management expectations or estimates of analysts.The following constructions of P/E are well known:The most simple and also most exploited is current price earnings ratio. This approach forms a ratio of current stock price and last posted earnings per share. This P/E works as a benchmark for other constructions of P/E. Thus, it is a basic measure for P/E based on intrinsic value and statistical methods derived from regression analysis. Due to its simplicity, the outcomes of this calculation are presented in stock recommendations, stock analysis, stock lists, etc.Normal P/E5 is based on Gordon dividend model transformed into profit model6. One of the underlying assumptions says that a part of company profit (earnings) is retained (b) and a part is paid out as a dividend (p). The (b) + (p) must equal to 1.IV0 = D1 / (k-g)IV0 = E1 * p / (k-g)P0 / E1 = p / (k-g)7Where IV0… intrinsic stock valuek… demanded rate of return5 Cipra Tomáš, Mathematics of securities, page 1186 Dividend discount model with constant growth7 Veselá Jitka, Securities analysis, part II, page 188 - 198E1… expect earnings in time period t+1D1… dividend in time period t+1g… dividend growth ratep… dividend pay-out ratioV0 = (P/E)N * E1Where (P/E)N equals to P0 / E1.And dividend D1 is defined in time period t+1 as:D1 = p * E1Further transformation of the formula leads to the determinants of current P/E. These are earnings growth rate, demanded rate of return, and dividend pay-out ratio. The impact of the first two was described in the above text. The impact of dividend pay-out ratio depends on a relation between ROE and demanded rate of return. Should ROE exceed demanded rate of return, then increase of dividend pay-out growth leads to lower P/E. Contrary, should ROE be lower than demanded rate of return, then an increase of dividend pay-out ratio results in higher P/E.Other type of P/E ratio is Sharp’s P/E, which arises from expected earnings instead of current earnings.IV0 / E0 = p* (1+g) / (k-g)Where IV0… stock intrinsic valueearningscurrentE0…k… demanded rate of returng… earnings growth ratep… dividend pay-out ratioIn case that earnings growth rate does not equal to zero, the Normal P/E and Sharp’s P/E8 differ just by a variance caused by the earnings growth.8 /~wfsharpe/The difference between Sharp’s and current P/E serves as an indicator, whether current stock price is undervalued or overvalued compared to its intrinsic value represented by Sharp’s P/E. The higher Sharp’s P/E indicates that the stock price is undervalued and contrary.Historic P/E is different approach calculated as an average of historic P/Es. Assumed is, that P/E moves in a range around its long-term average. A difference between the current P/E and the historic average symbolizes whether current stock price is priced correctly.Other construction of P/E is represented by regression P/E, which is calculated on the basis of regression formula that simulates changes of P/E based on its parameters. The parameters are derived from historic values of P/E and its key drivers. Once the formula is filed out with input data, it results in regression P/E.P/E = α + β*g + γ*p + δ*σ,Where α, β, γ, δ… regression coefficients,g... earnings growth rate,p... dividend pay-out ratio,σ... risk rate.Also regression P/E might be exploited for an analysis whether the current stock price is undervalued or overvalued.The last approach is known as P/E of comparable companies. This formulation of P/E compares the current P/E of one particular company with other peer companies of comparable parameters and similar business conditions.The practical investment strategies are based on the picking of stocks with low P/E or finding the intrinsic value of the company and comparing that with the current parameters. These strategies are being connected with so called low P/E effect or low P/E anomaly.The historic verification of the low P/E strategy has confirmed existence of low P/E anomaly which assures higher than average returns9.9 S. Basu: …The Investment Performance of Common Stock in Relation to their Price-Earnings: A Test of theDreman verified the low P/E strategy on a sample of historic data consisting of 1,250 stocksin the period between 1968 and 1977. Outcomes of his study are summarized in a table below.Exhibit 2 Annualized returns of portfolios (Dreman study)108M6M12M36MPortfolio 3M1. Highest P/E -2.64% -1.06%-1.13%-1.43% 0.33%2. 0.92% 1.62%0.56%-0.28% 1.27%3. 0.51% 0.62% 1.63%0.85% 3.30%4. 3.06% 3.42% 3.31% 4.87%5.36%5. 2.19% 4.46% 2.93% 5.02% 3.72%6. 4.84% 5.33% 6.70% 4.82% 4.52%7. 7.90% 6.07% 6.85% 5.89% 6.08%8. 8.83% 8.24%8.56%7.78% 6.35%9. 11.85% 8.40% 6.08%7.73% 6.40%10. Lowest P/E 14.00% 11.68%10.26%10.89% 7.89%Source: G. Smith: Investments, Scott and Foresman Company, 1990, p. 370Steven Bleiberg verification research based on the data between 1938 and 1989 has resultedin similar outcomes, which are summarized in table below.Exhibit 3 Annualized returns (%) in Bleiberg studyFifth by P/E level % of observations6M12M 24M0.41%1. 40 1.55%2.73%2. 13 1.99% 4.87%7.52%5.35%3. 15-1.32%-2.15%3.08%4. 11-2.06%-0.41%5. 216.59%12.37%20.95%7.01%Total 100 1.54% 3.98% Source: S. Lofthouse: Equity Investment Management, 1994, page 249The confirmation of the existence of low P/E anomaly in stock markets denies the effectivecapital market theory as described by E. Fama in 197010.Efficient Market hypothesis“, Journal of Finance no. 32, 1977,D. A. Goodman, J. W. Peavy: …Industry Relative Price-Earnings Ratios as Indicators of Investment Returns“,Financial Analysts Journal no. 39, 1983D. Dreman: The New Contrarian Investment Strategy, New York, Random House, 1982S. Bleiberg: How little we know about P/Es, but also perhaps more than we think, Journal of PortfolioManagement no. 15, summer 1989, page 26 – 3110 E. Fama: Efficient Capital Markets: A Review of Theory and Empirical Work, Journal of Finance, 25, p. 383-417, 1970Empirical ObservationsBased on the empirical data, the price earnings ratio might have been used for a construction of successful investment strategies.Could be this approach reverted and could it also work as an indicator for predicting of future stock market lows? Could high levels of P/E ratio predict future falls of stock markets?The chart below shows the development of S&P 500 index and its P/E between 1964 and 2009. In this period, there were four significant downturns of financial markets. The first is related to oil shocks in early 70s; the second happened in 1987, when the stock markets suddenly dropped; and next two falls were seen in 2001 and 2007 which were connected to a burst of dotcom bubble and to the U.S. subprime mortgage crisis, respectively.Exhibit 4 Development of S&P500 index and its price earnings between 1964 and 200902004006008001000120014001600180029.1.195429.1.195729.1.196029.1.196329.1.196629.1.196929.1.197229.1.197529.1.197829.1.198129.1.198429.1.198729.1.199029.1.199329.1.199629.1.199929.1.200229.1.200529.1.20085.0010.0015.0020.0025.0030.00S&P 500P/EAVG P/ESource: BloombergThe exhibit also illustrates that the P/E is very volatile indicator that historically fluctuated around its long term average. In different periods, the level of P/E differed and experienced both the sharp growths and sudden declines. Especially in the crisis periods, the P/E droppedto its long-term lows, as the uncertainty of market valuations froze the investors’ appetite. The same happened with other EV11 multiples such as book value, cash flow or sales.Back to the original question, whether the price earning ratio might foresee the future stock market falls. To analyze the observations, the regression and correlation analysis has been used. The histograms were constructed for indices S&P500 and PX12. The charts describe the dependency of annualized return of index S&P500 (in the chart showed on the x axis) on the level of P/E in investment horizon of one year. The regression line has slightly negative slope which confirms the assumption that the future returns are negatively correlated with the price earnings ratio. Nevertheless, the R square parameter results at 0.039, which means that only 3.9% of price movements could be interpreted by the P/E. The next picture simulates the case in higher investment horizon of 5 years. The slope of regression line is negative again. The regression coefficient R square amounts to 0.318. Thus, 31.8% of price movements could be interpreted by changes in P/E. The longer investment period brings more significant results in terms of R square.Another difference between observations with 1 year and five years horizon arises from P/E values exceeding 30. In the longer investment horizon period, each observation point with P/E higher than 30 results in negative annual return. This might implicate that investments in this period (P/E exceeds 30) are not profitable in the long-term horizon.The similar exercise has been performed with index PX and is illustrated in exhibit 6. However, the data for the Czech environment are limited to an interval between 2001 and 2008 only. Contrary to assumptions, this example ends in positive slope of regression line. Regression coefficient R square amounts to 0.052. The same simulation with five years investment horizon ends up with the negative slope of regression line and R square rises to 0.0896. This might be caused by the very short period of the research which covers exactly one cycle of bull and bear markets. Nevertheless, the data of this short period confirms assumption that high level of P/E might cause a fall of stock prices in the near future. Thus, P/E might act as a warning indicator.11 EV = Enterprise Value12 PX = index of Prague Stock ExchangeExhibit 5 Annualized return of S&P 500 with investment horizon 1year and 5 years respectively (1967 – 2008)-60.00%-30.00%0.00%30.00%60.00%P/EA n n u a l i z e d R e t u r n (I n v e s t m e n t H o r i z o n 1Y)-15%-10%-5%0%5%10%15%20%25%30%P/EA n u a l i z e d R e t u r n I n v e s t m e n t H o r i z o n 5YRegression formula ∆y = 0.174 – 0.006 * P/E Regression formula ∆y = 0.139 – 0.004 * P/E R square 0.039 R square 0.318 Standard deviation 0.164 Standard deviation 0.070 No. of observations 10,380 No. of observations 9,398Source: own calculations, BloombergExhibit 6 Annualized return of PX with investment horizon 1year and 5 years respectively (1967 – 2008)-80%-60%-40%-20%0%20%40%60%80%100%P/EA n n u a l i z e d R e t u r n I n v e s t m e n t H o r i z o n 1Y-10%-5%0%5%10%15%20%25%30%35%40%P/EA n n u a l i z e d R e t u r n I n v e s t m e n t H o r i z o n 5YRegression formula ∆y = -0.014 – 0.011 * P/E Regression formula ∆y = 0.531 – 0.018 * P/E R square 0.052 R square 0.895 Standard deviation 0.290 Standard deviation 0.034 No. of observations 1,831 No. of observations 826Source: own calculations, BloombergThe following charts highlight the relation between future annual return of S&P 500 index and its P/E in periods prior the respective crisis and in periods during these crises.Exhibit 7 Annualized return of S&P500 with investment horizon 5 years respectively (1967 – 2008)19721973-1974-6.00%-5.00%-4.00%-3.00%-2.00%-1.00%0.00%1.00%P/EA n n u a l i z e d R e t u r n I n v e s t m e n t H o r i z o n 1Y-8.00%-6.00%-4.00%-2.00%0.00%2.00%4.00%6.00%8.00%10.00%12.00%14.00%P/E1986-19871987-19890.00%2.00%4.00%6.00%8.00%10.00%12.00%5.0010.0015.0020.0025.00P/EA n u a l i z o v a n ý v ýn o s i n d e x u S &P 500 v h o r i z o n t u 5 l et0%2%4%6%8%10%12%14%5.0010.0015.0020.0025.00P/EA n u a l i z o v a n ý v ýn o s i n d e x u S &P 500 v h o r i z o n t u 5 l e t1999-20002000-2002-6%-5%-4%-3%-2%-1%0%5.0010.0015.0020.0025.0030.0035.00P/E-10.00%-5.00%0.00%5.00%10.00%15.00%P/EThe take-aways from the exhibit are not unique for each crisis. In period prior to oil shock crisis in 1972, the level of P/E amounted to approx. 20. During the crisis the P/E level fell down to 7 – 8. In the example of 1987 stock price fall, P/E rose sharply from 12 to 22 in preceding year. The sudden fall of stock prices returned the P/E back to 10.In the 90s, the stock prices boomed. Analysts interpreted the stock price boom with new information technologies. Even in short time prior the burst of that bubble, analysts commented on this matter and argued with new IC/IT technology that justifies the high level of P/E. P/E reached its maximum of 30. The bubble burst in 2001 and the P/E ratio fell to 15.Exhibit 8 Development of price earnings ratio during the selected crisisOils shocks 1987Dotcom bubble U.S. subprime mortgageSource: Own calculations, BloombergThe level of P/E ratio in period preceding the current crisis amounted to 17, which was comparably less than the level in 2001. The subsequent stock market turmoil, which anticipated the world recession, pushed it down to 11.The historic values of P/E and its development in decades between 1954 and 2009 are shown in exhibit 8.Before stock market fall in 1987 and before the burst of dotcom bubble in 20000, the level of P/E exceeded significantly its long term average. Especially during 90s, price earnings ratio jumped beyond 30. However, subsequent downturn backed the multiple to the level of long term average around 16.Similar observations are shown in exhibit 9, which illustrates development of P/E arithmetic mean of S&P500 in particular year. The chart is constructed for a 5 years prior and 5 years after the year of the stock market fall. This might disclose whether, price earnings ratio might be used as an indicator for prediction of future stock market falls.Exhibit 9 Annual return of S&P500 and its average price earnings ratio1968 – 1978-30.0%-20.0%-10.0%0.0%10.0%20.0%30.0%1982 - 19921995 - 20052002 – 2009Source: Own calculations, Bloomberg-30.0%-20.0%-10.0%0.0%10.0%20.0%30.0%34.2%31.7%-40.0%-30.0%-20.0%-10.0%0.0%10.0%20.0%30.0%40.0%Stock market fall in 1973 was not preceded by price earnings ratio higher than 30. However, P/E exceeded its average in each of those 5 years prior to 1973. Price earnings ratio after the crisis decreased by half compared to its level before the stock market turmoil.Interpretation of the stock market decline from 1987 might be different. It seems like it was just one-off correction that resulted in decline of P/E which has been above average only during the year 1987. Nevertheless, the S&P500 ended with positive annual return in that year. At the beginning of 80s, P/E level was relatively low. Subsequently, the values of price earnings ratio grew from 8 to 18.Burst of the so called dotcom bubble in 2000 was in line with assumed scenario. Since 1995 on, the P/E ratio grew from 16 to more than 28. After the burst in 2000, the P/E returned to its long term average. Compared to 70s, the decrease was rather gradual.The last picture of exhibit 9 shows the current economic crisis development in terms of P/E development and stock prices behavior. The intensity of the fall of price earnings ratio is fully comparable with 70s. Contrary to 70s, the level of price earnings ratio did not significantly exceed its average. This offers an idea that the current crisis and preceding fall of stock markets was a further continuation of stock market fall in 2000, which followed after the boom of stock prices in 90s.。