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← Price Ratios and Valuation Multiples
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Question
What specific problem does the Cyclically Adjusted P/E (CAPE) developed by Robert Shiller solve?
1
It accounts for differences in dividend payout ratios between companies
2
It adjusts earnings for differences in accounting standards between countries
3
It corrects for the distortions caused by the business cycle by averaging inflation-adjusted earnings over the preceding ten years
4
It removes the effect of share buybacks on reported earnings per share
Press 1–4 to pick an answer
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