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LOS e: Explain and justify the use of earnings yield (E/P).
Q1. A common pitfall in interpreting earnings yields in valuation is:
A) look-ahead bias.
B) using underlying earnings.
C) using negative earnings.
Q2. A common justification for using earnings yields in valuation is that:
A) earnings are more stable than dividends.
B) negative earnings render P/E ratios meaningless and prices are never negative.
C) earnings are usually greater than free cash flows.
Q3. The observation that negative price to earnings (P/E) ratios are meaningless and prices are never negative is used to justify which valuation approach?
A) Earnings yield.
B) Dividend discount model.
C) Dividend yield. | 
发表于 2009-3-9 16:54
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