Chartered Financial Analyst Level 2
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49 An analyst estimates a company's stock value using a residual income model, then divides this value by the company's book value per share. The resulting ratio is subsequently compared to the company's actual P/B ratio. The analyst's approach to valuation is best described as the:
49 An analyst estimates a company's stock value using a residual income model, then divides this value by the company's book value per share. The resulting ratio is subsequently compared to the company's actual P/B ratio. The analyst's approach to valuation is best described as the:
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A
method of comparables.
B
method based on forecasted fundamentals.
C
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