Question
Stock valuation is the process of determining the current (or projected) worth of a stock at a given time period. There are 2 main ways
Stock valuation is the process of determining the current (or projected) worth of a stock at a given time period. There are 2 main ways to value stocks: absolute and relative valuation. Discounted Cash Flow (DCF) is a method to calculate the present worth of stock by forecasting their future cash streams discounted by a discount rate (relative to risk to these future cash flow). Relative valuation is a method that compares a stock value to that of its peer firm stocks within the same industry (or similar industry) to assess the stocks worth. Which method in your view is more accurate and why? Discuss in about 200 words with an example.
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