Answer: does not account for differences in the duration of growth.

## Explanation **Option B is correct:** The PEG ratio (P/E to Growth ratio) does not account for differences in the duration of growth. The PEG ratio simply divides the P/E ratio by the expected earnings growth rate, but it assumes that the growth rate will persist indefinitely, which is rarely the case. Companies may have different growth duration periods - some may have high growth for only a few years while others may sustain it longer. **Option A is incorrect:** The PEG ratio does not explicitly factor in differences in risk. Risk is incorporated indirectly through the P/E multiple (since higher risk typically leads to lower P/E), but the PEG ratio itself doesn't have a direct risk adjustment component. **Option C is incorrect:** The PEG ratio actually assumes a linear relationship between P/E and growth, not a non-linear one. The formula P/E ÷ g suggests that P/E should be proportional to growth, which is a linear assumption.

Author: LeetQuiz Editorial Team