CFA Practice Question

CFA Practice Question

When using macroanalysis in estimating an industry earnings multiplier
A. you first estimate the industry growth rate (g) which is determined by the retention rate and the return on equity.
B. you examine the relationship between the multiplier for the industry and the market.
C. you examine the specific variables that influence the earnings multiplier.
Explanation: The two alternative techniques to estimate an industry earnings multiplier are macroanalysis, where you examine the relationship between the multiplier for the industry and the market, and microanalysis where you examine the specific variables that influence the earnings multiplier.

User Contributed Comments 3

User Comment
danlan Good explanation
jam99003 I always get tripped up by the wording. I need to be CAREFUL on the exam day.
takor a good part of success in this exam lies in understanding the wordings in Qs. This one got me!
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