How does number compare with average implied growth rate

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Question: The S&P 500 During Boom and Bust {Easy)

a. At the end of 2008, after the S&P 500 had returned -37 .0 percent for the year during the financial crisis, the S&P 500 index stood at 903. Analysts were forecasting forward earnings of 73 .0 on book value at the end o:f 2008 of 451 . If the required return for investing in equities is 9 percent, what is the growth forecast that is implicit in the index price of903? How does this number compare with the average implied growth rates for the index in Figure?

b. Repeat the exercise at the end on 1999 when the index stood at 1,469 with a book value of 294. Forward earnings estimates at the time were 50.1.

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Reference no: EM131490717

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