You are analyzing an industry (I) and the overall market (M). You find the following data: Industry

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You are analyzing an industry (I) and the overall market (M). You find the following data:

Industry (I) Market (M)

ROE 0.12 0.16

Reinvestment rate 0.6 0.55

Beta 1.05 1.00

Assume risk-free rate = 6% and E(Rm) = 16%

Calculate and discuss what difference you expect in the P/E ratios of the industry vs. the overall market.

Related Book For answer-question

Applied Corporate Finance

ISBN: 978-1118808931

4th edition

Authors: Aswath Damodaran

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Posted Date: Apr 19, 2023 12:02 AM

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You are analyzing an industry (I) and the overall market (M). You find the following data: Industry

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Expert Answer:

To calculate the expected PE ratios for the industry and the overall market we can use the following ... View the full answer

Applied Corporate Finance

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