Question #84
Reading: Reading 22 Market-Based Valuation - Price and Enterprise Value Multiples
PDF File: Reading 22 Market-Based Valuation - Price and Enterprise Value Multiples.pdf
Page: 30
Status: Unattempted
Correct Answer: A
Question
A common pitfall in interpreting earnings yields in valuation is:
Answer Choices:
A. using negative earnings
B. using underlying earnings
C. look-ahead bias
Explanation
A common pitfall is look-ahead bias, wherein the analyst uses information that was not
available to the investor when calculating the earnings yield.