Pg 278, Study session 12 of Schweser book. Low persistence factor associated with High ROE. Shouldn’t this be low persistence factor associated with Low ROE?
because of competition>>> wil enter to the maket >> LARGE ROE will cause competition>>
another way to think might be: in Residual income, present value of continuing income=(ROE-r) x BV / (1+r-w) r = required return on equity w = persistent factor if w gets larger, present value of residual income get bigger. hence bigger residual income, bigger return on euity.