Stock valuations: Find out how stocks are valued.
Categories of Valuation Models:
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- Absolute Valuation: Attempts to find the intrinsic or “true” value of an investment based on fundamentals.
- Relative Valuation: Attempts to find the valuation by comparing the company in question to other similar companies.
Popular valuation methods:
- Dividend Discount Model (DDM): This is an absolute valuation model that derives the “true” value of a company based on the dividends it pays to the shareholders.
- Discounted Cash Flow Model (DCF): Instead of dividends, the DCF model uses a company’s discounted future cash flows to value the business.
- The Comparables Model: Instead of finding an intrinsic value for the stock, this model compares the stock’s price multiples to a benchmark to determine if the stock is undervalued or overvalued.
Academic Questions / Assignments
Academic Questions / Assignments on Stock Valuation .
Assignment
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