Forward (justified) Earnings Yield in CME

CFA Level III Economics
#1

Gentlemen,

anyone of you so kind to remind me how to justify a trailing E/P if given? Should I multiply it by (1+g)?

Should I then leave behind from CFA L2 the (1-b) / (r-g) intended as Leading P/E?

thanks,

Regards

#2

Yea.

For the trailing P/E, it’s (1-b) (1+g) / (r-g)

#3

Thanks Mr Smart

if I well understand once given with the trailing I multiply by (1+g) end of the game ?

thanks indeed

#4

Just remember that you’re dividing the GGM of the DDM by Earnings.

If it’s E1, then you already have D1 in the equation, so it’s (1-b)

If it’s E0, you need to get D0, so leave out the (1+g)

#5

thanks!