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4 . ( Optional question ) Prove the DCF method of valuation is equivalent to the replicating method of valuation . Specifically , PV =
4 . ( Optional question ) Prove the DCF method of valuation is equivalent to the replicating method of valuation . Specifically , PV = E ( C ) Cool ' C ( PV , Tm* 1 + rf t - Var ( i'm ) ( E ( TM ) - rp ) ( DCF ) PV = at b where b _ Cov ( C , T. ) and a = E ( C ) - b [ 1 + E ( I'm ) ] Var ( I'm ) 1 + !'` ( Replicating )
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