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vs.
Bond Yield (10 Yr. Govt Bond)
CFM GROUP 4
A B H I S H E K | A R N AW | A R U N | R A J I V | R U PA M
Earning Yield
Dividend
Yield
1.21% ~
1.62%
Mean
1.40
Coeff of
Var
0.075
Earning
4.15% ~
5.00
0.121
o
Observation:
Dividend
Yield
is much
Yield
6.57%
5
4
Dividend/earning Yield %
3
2
1
0
Dividend Yield
Earning Yield
o YIELD GAP:The difference between average Dividend Yield and average Bond Yield
o Assesses the value of stocks using bond yields to indicate whether equity markets are
overvalued or undervalued compared to government bonds.
o Henceforth, we will use BEER for Time-Series analysis as we are using Earning
Yield
20.00
18.00
1.7
1.5
16.00
14.00
12.00
1.3
Bond Equity Earnings Yield Ratio
10.00
8.00
1.1
0.9
0.9
6.00
4.00
2.00
2.00
0.7
0.7
BEER
BEER Ratio
Ratio
Earning
Earning Yield
Yield
0.00
0.00
Bond
Bond Yield
Yield
Current Scenario
Thank You!