Stocks or Bonds, which one is overprived? Use its P/E ratio and Yield spread (the stock yied spread is: earning yield E/P minus yield in the T-bond) to make a call. 

You do not need to find the data for me, but I hope you can explain the principle for the method required in the question, like how can the P/E and yied spread explain which one is overpriced? Or to give me a hint or guidline for solving the problem is also great.

Answer rating: 100% (QA)

The PE ratio and yield spread are both useful measures for comparing the relative valuation of stock... View the full answer