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5. RISK AND RETURN In an equity research re...

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Question

5. 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 analysis?

 

Paper#13934 | Written in 18-Jul-2015

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