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Stock Valuation The Insights And Expertise Of Essay

Stock Valuation The insights and expertise of Kathleen Collings-Lang in the video Stock Valuation are invaluable in gaining insights into the similarities and differences of how bonds and stocks are valued today, emerging trends in these fields, and the critical role of quantitative analysis in determining the value of equity investments. The valuation of stock and equity investments is more accurate when qualitative and quantitative factors are taken into account (Fielitz, Muller, 1985). Ms. Collings-Lang accentuates this point in her discussion of stock valuation techniques, indicating that the selection of a dividend discount rate, which can is often subjective, is integral to the dividend discount model being correctly used to value a given stock. She alludes to the fact that the selection of a dividend discount rate also must take into account he nuanced and highly specific factors impacting a business, seasonality being one of the most significant for capital-intensive businesses (Chen, Jindra, 2010).

Foundational Concepts of Stock and Debt Investment Valuations

The video Stock Valuations accurately and succinctly explains the difference in stock vs. bond or debt-based investment strategies, both from a company initiating these strategies to gain capital to grow and from the investor's...

A share of stock represents a small percentage of ownership in a firm, while a bond issue is a contract with the company indicating payment in the future for investing in a bond today. Ms. Collings-Lang explains how bonds are inherently more quantitative in nature. She provides an overview of how her practice is advising clients on how best to invest in bonds relative to stocks today and in the future.
Stock Valuation Integrates Qualitative and Quantitative Aspects of Investment Management

While the discussion of bonds is clearly focusing on the quantitative aspects including the indexing of relative risk, Ms. Collings-Lang's discussion of the nuances of stock valuation illustrate how expertise in a given industry or market segment is essential for predicting stock performance. She explains how the initial decision of a firm to file for an Initial Public Offering (IPO), the timing of the IPO, projected price per share and comparing the stock price relative to market conditions and a concept she calls the market window all must be taken into account in determining the initial price of a stock. She also lists the necessary requirements of staying in compliance to the U.S. Securities and Commission (SEC) filing and reporting requirements, in addition to the specific stock…

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Bibliography

Chen, Z., & Jindra, J. (2010). A valuation study of stock market seasonality and the size effect. Journal of Portfolio Management, 36(3), 78-92, 10.

Fielitz, B.D., & Muller, F.L. (1985). A simplified approach to common stock valuation. Financial Analysts Journal, 41(6), 35.
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