Is Equity current earnings yield/ current 10-year treasury yield
or
Equity forward earnings yield/ current 10-year treasury yield?
2011 exam uses forwards earnings yield. My notes has current earnings yield. But i still got the right answer…
amazing…
Staright from CFA R17 pg145:
S&P earnings yield (usually defined as forward operating earnings yield)
What’s the rationale here? Numerator and denominor should be consistent?
Current earnings yield on equities uses previous year’s earnings and today’s price. FEY = predicted earnings/current price
The cash received for a treasury is fixed (unlike businesses), so next year’s earnings = this year’s earnings. So yield = next year’s earnings/current price
Thanks. Great explanation!