Question

As an investor, given your investment philosophy, time horizon and beliefs about markets (that you will...

As an investor, given your investment philosophy, time horizon and beliefs about markets (that you will be investing in), which of the approaches to valuation would you choose?

  1. Discounted Cash Flow Valuation
  2. Relative Valuation
  3. Neither. I believe that markets are efficient.
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

I do not believe the market are efficient and there is always a difference between the value of a share and the price of the share so I would be using relative valuations like multiple ratios which would be combination of price to earning ratio and price to book values and comparing various ratios to the industry standards in order to finding out the standing of a particular company in the overall industry.

Relative valuation is a method in which the the price of a company and the statements of a company are compared to that of another company in the same industry as this believes in the law of One price, and it advocates that all the similar assets will be having similar prices so, I would be trying to finding out the undervalued company using the relative valuation method and I would be trying to capitalise between the value and the price of the company and make a high rate of return

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
If an investor has a long term investment horizon relative to the time to maturity of...
If an investor has a long term investment horizon relative to the time to maturity of the bond, then which of the following interest rate risks is most important to the investor? A. Market price risk B. Coupon re-investment risk C. Effective duration
What is your personal beliefs about the nature of human behavior, the basic tenets of human...
What is your personal beliefs about the nature of human behavior, the basic tenets of human needs and the principles and approaches of counseling that you believe to most effectively address such behavior and needs. Include your beliefs about the therapeutic relationship, personal strengths and characteristics that you bring to such a relationship and ethical guidelines that you consider important to adhere to within such a relationship. Your thoughts should make sense together as a whole. For example, although the...
1. T or F: For holders of bonds, investment horizon is always equal to time to...
1. T or F: For holders of bonds, investment horizon is always equal to time to maturity 2. T or F: the modified duration of a zero-coupon bond is equal to its time to maturity 3. T or F: the purpose of duration immunizing is to maximize expected return. 4. T or F: Perpetuity bonds have a duration of infinity 5. T or F: Duration increases with a rise in yield 6. T or F: Prices rise more with a...
1. T or F: For holders of bonds, investment horizon is always equal to time to...
1. T or F: For holders of bonds, investment horizon is always equal to time to maturity 2. T or F: the modified duration of a zero-coupon bond is equal to its time to maturity 3. T or F: the purpose of duration immunizing is to maximize expected return. 4. T or F: Perpetuity bonds have a duration of infinity 5. T or F: Duration increases with a rise in yield 6. T or F: Prices rise more with a...
1. You go to your regular appointment with your financial advisor Mr. Dayan. You complain about...
1. You go to your regular appointment with your financial advisor Mr. Dayan. You complain about the recent news in the Wall Street Journal that a member of Congress used information in a classified briefing to make profitable investment decisions. You argue that investors are able to earn abnormal returns tracking firm fundamentals such as earnings announcements, and that you are sympathetic to that. However, the Congress member’s ability of profiting from the briefing is unacceptable. Mr. Dayan disagrees with...
You are endowed with $5,000 of after-tax cash and 20-year investment horizon. You have a marginal...
You are endowed with $5,000 of after-tax cash and 20-year investment horizon. You have a marginal tax rate of 40% and you expect to face the same rate over the next 20 years. You expect that investing passively in an index fund will generate a 10% return each year, pretax, for the next 20 years The future value of a $1 investment for 20 periods is as follows:       R Factor       6% 3.207       8% 4.661       10% 6.728...
As an investor, you are faced with a marginal federal tax rate of 29% and a...
As an investor, you are faced with a marginal federal tax rate of 29% and a provincial tax rate of 11.16%. You have $30,000 available to invest for 1 year at which time you will cash in your investment and purchase a new car. Your investment opportunities include: (a) investing in a one year term deposit offering a guaranteed return of 4% or (b) investing in the preferred shares of Z Ltd. with a stated dividend of $.20 per share....
As an investor, you are faced with a marginal federal tax rate of 29% and a...
As an investor, you are faced with a marginal federal tax rate of 29% and a provincial tax rate of 11.16%. You have $30,000 available to invest for 1 year at which time you will cash in your investment and purchase a new car. Your investment opportunities include: (a) investing in a one year term deposit offering a guaranteed return of 4% or (b) investing in the preferred shares of Z Ltd. with a stated dividend of $.20 per share....
(a). Which would you prefer as an investor (circle one)? Why? i An investment with a...
(a). Which would you prefer as an investor (circle one)? Why? i An investment with a 20% return half the time and a -10% return half the time. ii An investment with a 30% return half the time and a -25% return half the time. (b) For a hedge fund with 2% management fees and a 20% performance fee benchmarked to the risk-free rate of 0%, what are the average fees they get (as a percent of assets under management)...
Investor attitudes toward risk Erik is an investor with $5,000 available for investment. He has the...
Investor attitudes toward risk Erik is an investor with $5,000 available for investment. He has the following three investment possibilities from which to choose: Option Scenarios 1 Keep the $5,000 in cash for one year. 2 Invest in a friend’s business with a 50% chance of getting $10,000 after one year and a 50% chance of getting nothing. 3 Invest in a relative’s business with a 30% chance of getting $15,000 after one year, 20% chance of getting $2,500 after...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT
Active Questions
  • Your company is thinking of introducing a Bring Your Own Device (BYOD) policy. You have been...
    asked 3 minutes ago
  • Attached is the file GeometricObject.java. Include this in your project, but do not change. Create a...
    asked 5 minutes ago
  • Suppose the number of cars in a household has a binomial distribution with parameters n =...
    asked 8 minutes ago
  • HR needs some information on the new interns put into a database. Given an id, email,...
    asked 29 minutes ago
  • Problem solving strategies Questions years = input("Enter a number of years and I'll tell you how...
    asked 33 minutes ago
  • Calculate ?Hrxn for the following reaction: CH4(g)+4Cl2(g)?CCl4(g)+4HCl(g) Use the following reactions and given ?H?s. C(s)+2H2(g)?CH4(g)?H=?74.6kJC(s)+2Cl2(g)?CCl4(g)?H=?95.7kJH2(g)+Cl2(g)?2HCl(g)?H=?184.6kJ Express...
    asked 40 minutes ago
  • ASCII (American Standard Code for Information Interchange) has an encoding for every character of the alphabet,...
    asked 54 minutes ago
  • Is home confinement with electronic monitoring a deterrent? Are there negatives to being confined to one’s...
    asked 1 hour ago
  • Social hostility can have severe lasting effects of interperpersonal relationship during our adolescence years, which if...
    asked 1 hour ago
  • - A series RLC circuit has R=15 ?, L=1.5 H, and C=15 ?F. (a) For what...
    asked 1 hour ago
  • TV Circuit has 30 large-screen televisions in a warehouse in Erie and 60 large-screen televisions in...
    asked 1 hour ago
  • Charges q1, q2, q3, and q4 are placed in sequential order at the corners of a...
    asked 1 hour ago