Colum

"CFAI IMHO would not ask a basic memorization question on this. So to use this bad boy, you compare the earnings yield from this model to the current market earnings yield. If the current market yield is higher, equities are underpriced. "

Could you briefly explain why equities would be under priced?
If the model says earnings yield should be 2% and in the market it is 4%....then...?
sorry i have a knot in my head.