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?
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.
What is the concept of the Law of One Price? What is absolute PPP? What is relative PPP? What is the rationale behind PPP? What are some possible explanations for the deviations from the purchasing power parity?