Question

1. What's the formula to calculate share price? Does it equal to (total firm value/outstanding shares)...

1. What's the formula to calculate share price?

Does it equal to (total firm value/outstanding shares) or (total equity value/ outstanding shares)?

2. Does volatility mean standard deviation?

Homework Answers

Answer #1

1. Share price = total equity value / total outstanding shares

It is not total firm value related formula because total firm is made up of both debt and equity :)

2. Standard deviation is used as a tool to measure volatility. Volatility referes to the change in prices of stock both upwards and downward. Standard deviations can measure this volatility in a standard form. It is also measure by variance :). In finance, volatility is often measured by standard deviations

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