Question: P/BV = 0.80 + 0.075 (Return on Equity) - 0.50 (Beta) (Eg. For company with ROE=10% and Beta=1.00, P/BV = 0.8+ 0.075(10)-0.5(1.0)=1.05) Based on this

P/BV = 0.80 + 0.075 (Return on Equity) - 0.50 (Beta) (Eg. For company with ROE=10% and Beta=1.00, P/BV = 0.8+ 0.075(10)-0.5(1.0)=1.05) Based on this regression, estimate whether company A is correctly valued, relative to the sector. (1 point) c. Using the same regression, estimate what the return on equity of company C would have to be for it to be fairly valued by the market. (1 point)

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