What is the assumed maturity for corporate bonds in Yardeni model?

Sorry, can’t find this anywhere.

Yardeni model is: E1/P0 = yB - d(LTEG) with yB = yiled on A-rated corporate bonds. What is their maturity supposed to be? Short term? Intermediate term?

5 year

Based on what?

Been a while since I went over this stuff, so I may be wrong … but I recall something about 10 years. In the fed model 10 year bond yield should equal the equity market dividend yield, otherwise one market is over or underpriced relative to the other but doesn’t account for expected future earnings or something like that. Yardeni model builds on this idea and uses earnings instead of dividends … so I’d guess that its still assuming a 10 year maturity since its meant to be a kind of modified fed model (in my view).

Again, I could be wrong and its been a while since I read this chapter, so would appreciate additional insight.

10yr If I remember correctly.


Looked it up again in the books, and not specified. The thing mentioned is that the Fedmodel usaully defined as 10 year treasurynote. So I figure it would be save to say Yardani uses the same maturity. Hope this wouldnt come up on the exam…