How would you use cash flow discount method and comparable method (aka relative value method) to estimate the intrinsic value of these two stocks? Discuss the pros and cons of the two methods. Use Macy and Nordstorm company as an example.
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- i) Calculate the expected return for each stock assuming the Capital Asset Pricing Model (CAPM) is valid, and explain if they are correctly priced. Show your calculations.Can someone give an example or scenario about the following: 1. Capital Asset Pricing Model2. Market Risk premium3. Risk free rate4. Security market line5. Systematic riskSolve soon i will give u 2 like sure Investors are most likely to use what type of valuation across a variety of different securities? a. Discounted Cash Flow Model b. Residual Operating Income Model c. Dividend Discount Model
- 1. Which of the following models for mathematics of the financial markets is dependent on expectations or probabilities of changes in the value of an underlying asset? A. Monte Carlo Simulation B. Black Scholes Model C. Cox-Ross-Rubinstein Model 2. Models for the financial markets are primarily used for all of the following, except, A. Algorithmic Trading B. Technical Analysis (Short term trading) C. Fundamental Analysis (Long term investing D. All of the above 3. Which among the following organizations use financial mathematics as part of their core operation? A. Investment banks B. Government C. Hedge funds D. All of the above 4. S1: Quantitative finance helps to allocate resources to provide the optimum returns. S2: Financial models are accurate. A. Both statements are true B. Both statements are false C.…A3) Finance Discuss why the MIRR is a better measurement than the IRR.To estimate the required rate of return on a stock we can use the Capital Asset Pricing Model (CAPM) or the Discount Dividends Model. How we can decide which model to use? Explain.
- Derive CAPM and explain the concept of systematic risk. Explain the notion of geometric Brownian motion and hence derive Ito’s lemma. Narrate how inflation impacts present value of cash flow. What do you mean by ‘beauty contest’ and discuss its impact on investment decision of investors in stock market.Which of the following is NOT a principle of finance? on Select one: a. company advantage O b. portfolio effect O c. Time Value of Money O d. risk-return tradeoff O e. ValuationWhat does the capital asset pricing model (CAPM) calculate? a. The expected rate of return on an individual stock with respect to the risk-free rate of return b. The expected rate of return of an individual stock based on its overall risk c. The expected rate of return of an individual stock with respect to its market risk only d. The expected rate of return of an individual stock reflecting its financial risk Clear my choice
- 2. How would you describe the correlation between risk and return in investments, and what are the various types of income that investors consider from their standpoint?Which of the following decision criteria is the easiest to use and very popular among investors? O Payback period. O Internal rate of return. O Average accounting return. Net present value. O Discounted return on investment.A fundamental analyst uses the discounted cashflow method to value firms, and has a short-term perspective on purchasing stocks and bonds. True or false?