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)

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  • Alta12
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    @ravivooda @vincentt

    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
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    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.

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

    Alta12
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    Thanks @vincentt @beancounter I got confused with ’10 years prior’. All good now.

    BeanCounter
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    @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…

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