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Equity Valuation Models

In: Fundamentals of Institutional Asset Management

Author

Listed:
  • Frank J. Fabozzi
  • Francesco A. Fabozzi

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…

Suggested Citation

  • Frank J. Fabozzi & Francesco A. Fabozzi, 2020. "Equity Valuation Models," World Scientific Book Chapters, in: Fundamentals of Institutional Asset Management, chapter 11, pages 303-330, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811221590_0011
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    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;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G1 - Financial Economics - - General Financial Markets

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