predictedPEbyFEDmodel {stockAnalyst}

Calculates predicted value of Price to Earning Multiple based on yields on bonds.

Description

The US FED model based on a paper written by three analysts, Lander, Orphanides, and Douvogiannis in 1997, at the US Federal Reserve, predicts the return on the S&P 500 on the basis of the relationship between forecasted earnings yields and yields on bonds (as cited in Jerald E. Pinto, 2020).

Usage

predictedPEbyFEDmodel(tenYrBondYield)

Arguments

tenYrBondYield

number.

Details

According to information provided by Jerald E. Pinto (2020), the method predictedPEbyFEDmodel is developed for computing predicted value of Price to Earning Multiple based on yields on bonds.

Value

Input values to tenYrBondYield.

Author(s)

MaheshP Kumar, [e-mail]

References

Pinto, J. E. (2020). Equity Asset Valuation (4th ed.). Wiley Professional Development (P&T). https://bookshelf.vitalsource.com/books/9781119628194

Examples

predictedPEbyFEDmodel(tenYrBondYield=0.0293)