Justified P/E = 4.3
If actual P/E is 16, then the asset is overpriced. Completely understood!
But why it’s underpriced if the actual P/E is 7?? yet it’s above the justified ratio of 4.3, so it should be overpriced as well, shouldn’t?!!
Study together. Pass together.
Join the world's largest online community of CFA, CAIA and FRM candidates.