NO.PZ201710200100000302
问题如下:
2. Based on its justified leading P/E and the Gordon growth model, XYZ stock is:
选项:
A.undervalued.
B.fairly valued
C.overvalued.
解释:
B is correct.
The justified leading P/E is calculated as
P0E1=(1−b)(r−g)
where b is the retention ratio, 1 – b is the dividend payout ratio, r is the discount rate, and g is the long-term growth rate.
The justified leading P/E is
P0E1=0.8(0.07−0.03)=20
XYZ’s actual leading P/E is
P0E1=100.5=20
Because the justified leading P/E equals the actual leading P/E, the stock is fairly valued.