1. Define valuation 2. Contrast absolute (DCF) and relative valuation models. 3. Discuss the CAPM approach to determining the required rate of return for an equity investment 4. What are the sources of bias in valuation?
Link why – and how - absolute and relative valuation tools are
combined when discerning intrinsic value. How do you
calculate a relative P/E metric value from history? What
are the conceptual and practical objectives of multiple measures in
determining a valuation range?
Provide several criticisms of relative valuation. Which method
of valuation do you think is more accurate, relative or discounted
present value (DCF or intrinsic value) ? Why? How would rising
risks or rising interest rates affect multiples? DCF? Be specific
about how rising risks or interest rates influence multiplers? DCF?
How important to valuation is classifying a firm into the correct
industry? In what industry would you classify Amazon (past and
future)?
what do you consider to be the most important factor in
determining the valuation of both bonds and equities? (Note that
valuation is either the market price of the bond, or the current
stock price.) In your post explain both the reason you believe this
is the more important factor and how that factor varies with
different market conditions.