REGRESSION ANALYSIS:
Still another approach to the determination of and appropriate P/E ratio is a statistical approach. The broad determents of share prices such as earrings , growth risk and dividend policy may be used to estimate the appropriate P/E ratio whit the help of statistical analysis. The analyst identifies the factors which influences the share price and then ascertains the relationship between these factor and the share price. The relationship that exists at any point in time or price earning ratio and the set of specified determining variables can be estimated using multiple regression analysis.
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