Justified P/B

CFA Level II
#1

I’m seeing a problem in CFAI text (reading 43, problem 19) where they calculate the Justified P/B = 1 + ROE - r / r - g but in the schweser text they state its calculated as ROE - r / r - g Am I missing something?

#2

Justified P/B = ROE - g/r - g. The CFA problem is correct.

#3

idreesz Wrote: ------------------------------------------------------- > Justified P/B = ROE - g/r - g. The CFA problem is > correct. +1 B0 + ROE - r / r - g * B0 is what I think is used for RI Model.

#4

can use either model, both are correct, however your formulas are incorrect. check them

#5

1+(ROE-R)/(R-G) = (ROE-G)/(R-G)