Wednesday, February 16, 2011

When the Book to Price Ratio Matters

Constellation Energy Group, Inc. (NYSE:CEG) was significantly affected by the financial crisis in October 2008.  It is a company whose business ratios are strong but their price ratios are not.  This attracted the interest of Berkshire Hathaway plus it signals the presence of a source of risk not captured in traditional models such as CAPM but instead captured by the Book to Price ratio. 



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