BUSI 4502 Lecture Notes - Lecture 5: Variance Inflation Factor, Dividend Payout Ratio, Dividend Yield
30 Aug 2018
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Document Summary
The price to earnings ratio has been fluctuating since 1926 with range of 5. 9,in 1949, to 35 in: this simply means that a dollar per share could be worth . 90 in 1949 and in 1999. This huge fluctuation has been questionable by many investors. They are curious if the underprice or overpriced market is reasonable based on economic conditions during the year. The main aim of this study is to determine if the earnings multiple of u. s. stock market can be justified by the economic fundamentals at any given period. It also attempts to develop a tool that act as an indicator when stocks have increase unreasonably high. In this study, p/e is the dependent variable where as short-term rates, dividend yield, dividend payout ratio, money supply, earnings growth, gdp growth, and volatility and total return of s&p. The hypothesis is that a significant relationship exists between each independent and dependent variables.
