How might use the same idea to value securities

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A business can be valued by capitalizing its earnings stream.

Question 1: How might you use the same idea to value securities, especially the stock of large publicly held companies?

Question 2: Is there a way to calculate a value that could be compared to the stock's market price that would tell an investor whether it's a good buy? (If the market price is lower than the calculated value, the stock is a bargain.)

Question 3: What financial figures associated with shares of stock might be used in the calculation.

Question 4: Does one measure make more sense than the others?

Question 5: What factors would make a stock worth more or less than your calculated value?

Reference no: EM132597098

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