CFA CFA Level 3 Grinold-Kroner: repricing change in P/E (CFA Mock B – Ptolemy Q3)

# Grinold-Kroner: repricing change in P/E (CFA Mock B – Ptolemy Q3)

• Author
Posts
• 3

What does it mean by expected P/E 10 years prior?

Why is the repricing of P/E = 15 (expected P/E 10 years prior) on numerator? I would have thought the (current P/E) should be on the numerator?

A bit confused. Thanks.

• vincentt
Participant
• CFA Level 3
3

Price Changes = Ending Market Price / Beginning Market Price

Repricing changes = expected (future) P/E / Current

So 15 needs to be on the numerator.

If not mistaken P/E 10 years prior means Price divided by earnings of the past 10 years.

• 2

Thanks @vincentt @beancounter I got confused with ’10 years prior’. All good now.

• BeanCounter
Participant
• CFA Charterholder
2

@Alta – am not surprised. It was very strange terminology. That’s my biggest fear about the exam: that the words used to describe something in a question are different to what is in the books/they mean…

• BeanCounter
Participant
• CFA Charterholder
0

You need to work out what it means in terms of annual changes in PE.