标题: Equity Market Valuation - Fed Model [打印本页] 作者: kmf229 时间: 2013-5-3 06:22 标题: Equity Market Valuation - Fed Model
This should be really basic, but it’s driving me crazy that I can’t get my head around this.
The third criticism for the Fed model is that it compares a real variable (the index) to a nominal variable (treasury yield). Why is the index a real variable when inflation changes are not included? this is the text from schweser:
“The yield on a treasury is adjusted to incorporate changes in inflation and is thus considered nominal. The earnings yield will not automatically adjust to incoporate changes in inflation and could be considered real”
Am I reading this wrong? Help!作者: MonkeyBusiness 时间: 2013-5-3 06:26
Ipad wrote:
This should be really basic, but it’s driving me crazy that I can’t get my head around this.
The third criticism for the Fed model is that it compares a real variable (the index) to a nominal variable (treasury yield). Why is the index a real variable when inflation changes are not included? this is the text from schweser:
“The yield on a treasury is adjusted to incorporate changes in inflation and is thus considered nominal. The earnings yield will not automatically adjust to incoporate changes in inflation and could be considered real”
Am I reading this wrong? Help!
