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Basic Question 2 of 6
Which assumption will cause a company's shares to trade at a premium to their historical average multiple?
B. Earnings growth is likely to accelerate in the future.
C. The intensity of competition is likely to increase in the future.
A. The company makes a major acquisition.
B. Earnings growth is likely to accelerate in the future.
C. The intensity of competition is likely to increase in the future.
User Contributed Comments 1
| User | Comment |
|---|---|
| CFAJ | why not a? wouldn't this anticipated increase in earnings growth have been priced in already and thus reflected in historical prices? |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
explain considerations in the choice of an explicit forecast horizon and an analyst's choices in developing projections beyond the short-term forecast horizon
CFA® 2025 Level I Curriculum, Volume 3, Module 12.