Equity valuation measures:
what can they tell us?
i
Quarterly Bulletin 2002 Q4
Equity valuation measures: what can they tell us? | Bank of England
Page 1
Published on 16 December 2002
By Anne Vila Wetherilt and Olaf Weeken of the Bank's Monetary Instruments and Markets
Division.
This article examines the usefulness of summary statistics, such as the price-earnings ratio and the dividend yield,
that are commonly used in valuing equity markets. But these measures are very sensitive to assumptions made
about the (unobservable) equity risk premium, as well as to the precise definitions of earnings or dividends used in
the calculations. This limits their usefulness as summary statistics of equity valuations.
Equity valuation measures: what can they tell us?
Equity valuation measures: what can they tell us? | Bank of England
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