Came onto a question that asked to calculated justified P/B but also mentioned there should be an adjustment “should adjust BTP’s multiples to reflect a 25% discount for additional risks because of its small size and thin trading.”
So I found the P/B but I thought the adjutsment should be up (P/B x 1.25) rather than down (P/B x .75)… my reasoning is that, if the company is thinly traded and you want to make a 25% adjutsment, wouldnt you want to drive the P/B up to make it more expensive and riskier to buy?
Answer said to discount it down which sounds counter interuitive… now the justified P/B is cheaper when compared to industry ratios, so you would want to buy it ?