- UID
- 223369
- 帖子
- 207
- 主题
- 40
- 注册时间
- 2011-7-11
- 最后登录
- 2014-8-7
|
Last sentence of LOS 27.b in Schweser FRA, pg. 175, states:
"...If an investor fails to assign a lower weighting to the accrual component of the earnings, securities become mispriced."
What exactly is the weighting in this case? Conceptually, cash flows are better indicator of a firm's state of health - and therefore minimizes mispricing during valuation. But let's say if an analyst uses relative valuation, i.e. P/E then s/he is forced to use the accrual part of NI - what does weightage has to do with the valuation? |
|