[Anonymous]

Becker Question –

What is the purpose of Alternate approach – P/E Ratio? You are not getting any new information based on the example.

Am I missing something?

[Krage]

I have been looking at it also for a while. My only idea is that it should be P=Po/Eo x E1 (just like in PEG formula on the next page, Gs in the formula cancel each other out, so it can be rewritten as P=Po/Eo x E1). Otherwise, it makes no sense to me. Another hypothesis I have is that they give an actual P/E ratio in the problem and the value of E, so all you do is multiplying P/E x E to get the price.

Becker.
AUD - Aug 3 - 91
FAR - Oct 25 - 96
BEC - Nov 30 - 89
REG - Jan 24 '12 - ..

[smuppane]

I never understood this complete topic in the first place and have my exam on Monday. I will try to go thru the lecture and content today.

REG - 07/01/2011 - 93
AUD - 08/25/2011 - 95
FAR - 10/29/2011 - 94
BEC - 11/28/2011 - 90

[smuppane]

It is correct. The denominator is always next period dividend. Your second premise is right. P/E is always based on market's expectation of future earnings.

REG - 07/01/2011 - 93
AUD - 08/25/2011 - 95
FAR - 10/29/2011 - 94
BEC - 11/28/2011 - 90

[Author]

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