Normalised EPS

CFA Level II
#1

I swear i went through every possible combination in the table Avg ROE x BVPS. I put 12 in the end.

#2

I averaged first 5 years of ROE and then multiplied by final year BVPS. came out to one of the choices. only other option would have been to average all 6 years but then the answer wasn’t among the choices. There was a question like this on a mock or schweser (they’re all running together at this point)

#3

Crap. I averaged them all.

#4

but there were 7 years given…

#5

it was 1.78 you had to take the current earnings and divide by the previous BV to get ROE. average those out and then multiple by the current BV

#6

Weren’t there 7 years data or something like that? I couldnt get this. I think I did it for 20 minutes :frowning: Then I guessed.

#7

avg them all and you get them. i think

#8

I averaged all and multiplied by the final year BVPS…i remember doing this in schweser and it was right? Is it just 5 years back? how/why does that make sense?

#9

I averaged both 5yrs and 7yrs and multiplied by BVPS2007 and came close enough to the same answer.

#10

Smarshy Wrote: ------------------------------------------------------- > but there were 7 years given… sorry, there probably were, I averaged all but the last year, applied it the final year I remember there was a discussion here on AF about this last week which is why I remembered it

#11

answer i think is 2.11

#12

I picked 2.11. I guess I averaged the current year and that is wrong.

#13

I picked that one too, because it was the closest to my answer, even th9ought my answer was MUCH different, 2.11 was still closest

#14

i think it was years 01 to 07? I just took the average of the ROE from years 01 thru 06…omitting the value for 07 and multiplying by the current BVPS

#15

You average all of the ROE’s from the previous market cycle. The market cycle was stated as the 7 years given. The average ROE was 6.34%. The Book Value was 32.42 or so. The answer that I got came out to 2.09, closest to 2.11.

#16

cdawg12 Wrote: ------------------------------------------------------- > i think it was years 01 to 07? I just took the > average of the ROE from years 01 thru 06…omitting > the value for 07 and multiplying by the current > BVPS I did the same

#17

Nice

#18

i did the roe for the first 6 years * current year BV, got the highest answer, 2.11 i believe

#19

if you took the straight ROE data given, the average would have been 6.45. however, you have to take the current earnings and divide by the beginning BV. that’s how ROE is determined. remember RI(t) = (ROE-r) x BV(t-1) ==== E(t) - r x BV(t-1)

#20

i hope all you fuggers are wrong because i got 1.78 :slight_smile: