Reading 24: Macroanalysis and Microvaluation of the Stock M class, return, future, market, color

tycoon

CFA Institute Area 6: Economics
Session 6: Economic Concepts for Asset Valuation in Portfolio Management
Reading 24: Macroanalysis and Microvaluation of the Stock Market
LOS f: Evaluate the intrinsic value and estimated rate of return of the stock market by estimating future earnings per share and determining an appropriate earnings multiplier.

[此贴子已经被作者于2008-9-16 17:51:14编辑过]

zhouyp1982

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tycoon

Using an earnings multiplier approach to value the market, which of the following would NOT result in a higher P/E ratio for the market, all else equal?

A) Higher Treasury bill yields.

B) Higher net profits.

C) Higher total asset turnover.

D) Higher financial leverage.

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Answer and Explanation

Higher Treasury bill yields would result in higher required returns which would decrease the P/E ratio for the market. Higher net profits, higher total asset turnover, and higher financial leverage would all result in a higher growth rate (using DuPont analysis), which would result in a higher P/E ratio for the market.