- CFA Exams
- CFA Level I Exam
- Study Session 10. Equity Valuation (2)
- Reading 26. Industry and Company Analysis
- Subject 7. Long-term forecasting
CFA Practice Question
Which assumption will cause a company's shares to trade at a premium to their historical average multiple?
B. Earnings growth is likely to accelerate in the future.
C. The intensity of competition is likely to increase in the future.
A. The company makes a major acquisition.
B. Earnings growth is likely to accelerate in the future.
C. The intensity of competition is likely to increase in the future.
Correct Answer: B
User Contributed Comments 1
| User | Comment |
|---|---|
| CFAJ | why not a? wouldn't this anticipated increase in earnings growth have been priced in already and thus reflected in historical prices? |