4 - analysis? Solution:-No analyst making a decision based...

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Question:- RISK AND RETURN In an equity research report, an analyst calculates a forward earnings yield of 7% on a particular company common stock. Noting that this yield is higher than the 5% yield on a 10-year Treasury, the analyst reports a buy recommendation for the common stock and no favorable recommendation, just based on “yield”, for the Treasury bond. Question: Is this a balanced view? Could the analyst be making a mistake in his/her
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Unformatted text preview: analysis? Solution:-No analyst making a decision based on information given From the given information common stock earning higher Yield is more than the treasury bond of 10 years. As this per this information his statement is balanced view. Coz if common stock returns are more than the bond returns An individual investor always goes for higher return with bit of low risk...
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This note was uploaded on 09/08/2011 for the course ACCOUNTING 101 taught by Professor Bayne during the Winter '10 term at University of California, Berkeley.

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