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A share trades at a price - to - book ratio of 0 . 7 . An analyst who forecasts an ROCE of 1 2

A share trades at a price-to-book ratio of 0.7. An analyst who forecasts an ROCE of 12 percent each year in the future, and sets the required equity return at 10 percent, recommends a hold position. Does his recommendation agree with his forecast? Why?
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