Valuations Flashcards
1
Q
Valuations fundamental building blocks
A
Valuation will be affected by the following: Amount of each cf Timing of cf Riskiness of cf Required rate of return
2
Q
Valuations
Intro + myths
A
Valuation of assets can be done using expected cf. thus the more uncertain the cf the higher the risk and lower valuation. An active market creates value.
Myths
Valuations are quantitative thus correct
Valuations are objective. Bias may influence
Valuations has precision. Estimates
Valid over time period. Estimates change
Only the answer matters. Valuation process helps understand what creates value