Equity Valuation Models

Frank J. Fabozzi and Francesco A. Fabozzi

Chapter 11 in Fundamentals of Institutional Asset Management, 2020, pp 303-330 from World Scientific Publishing Co. Pte. Ltd.

Abstract: In this chapter, we discuss popular methods for valuing a firm’s equity or the value of a share of common stock. These methods fall into two categories: discounted cash flow model method and valuation by multiples method. Both methods require strong assumptions and expectations about the future. The product of these models is an estimate of the fair value of a stock. All fair value estimates are subject to model error and estimation error. There is no single valuation model that is perfect…

Keywords: Investment Risks; Investment Vehicles; Portfolio Theory; Asset Pricing Theory; Mean-Variance Analysis; Measuring Return; Measuring Risk; Company Equity Analysis; Equity Valuation Models; Common Stock Alpha Strategies; Common Stock Beta Strategies; Smart Beta Strategies; Factor Investing; Equity Indexing; Equity Derivatives; Bond Analytics; Bond Pricing; Interest Rate Risk; Duration; Interest Rate Derivatives; Credit Derivatives; Multi-Asset Portfolio Strategies; Collective Investment Vehicles; Alternative Assets (search for similar items in EconPapers)
JEL-codes: G1 G11 G3 G30 (search for similar items in EconPapers)
Date: 2020
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