Estimate the market risk premium

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1. There are a number of approaches may be used to estimate the market risk premium. Identify three of them, discuss and justify them in detailed.

2. Discuss in detailed the importance of capital budget and its influence to a company's growth and expansion. Please justify your response.

3. What is the difference between "market multiple" and "entity multiple." Discuss in detailed.

4. Explain the FOUR steps to eliminate the financing deficit or surplus. Justify your response.

5. Discuss the SIX [6] ways in which a manager's behavior might harm a firm's intrinsic value. Justify your response.

6. If an investor aversion to risk increased, would the risk premium on a high-beta stock increased by more or less than that on a low beta-stock? Discuss and justify your response.

7. Why do a volatile stock price necessarily imply irrational pricing? Justify your response.

8. Explain how to use the Free Cash Flow [FCF] valuation model to find the price per share of a common equity.

9. Explain why both put and call options are worth more if the stock return Standard Deviation is higher, but put and call options are affected oppositely by the stock price.

10. Option pricing is used in FOUR different ways...identify them and discuss any TWO in detailed and justify your response.

11. Discuss three [3] pros and cons each for a Co. going public.

Reference no: EM132710567

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