Assume I calculate g as ROE (1-p)/(1-ROE (1-p)) and the Ke


Question Description:

30

Nov 02, 2015. Assume I calculate g as ROE (1–p)/(1–ROE (1–p)) and the Ke from the CAPM. I replace both values in the formula PER = (ROE (1+g) – g)/ROE (Ke-g) but the PER I obtain is totally different from the one I get by dividing the  quotation  of  the  share  to  the  earnings per share. Is it possible to interpret that difference as an overvaluation or undervaluation of  that  share  on  the market? ykonnni
posted a question · Nov 02, 2015 at 5:06am

Answer

30