Explain how the process of valuing a high-growth company differs from valuing an established company.
Answer to relevant QuestionsIf growth is a significant value driver, does getting bigger translate into creating value? Why does organic growth often create more value than growth from acquisitions? Describe how different types of organic growth might create different amounts of value. How does the total market for a new product differ from a company’s addressable market? Which market is more relevant for forecasting a company’s revenues? Assuming investors had perfect foresight, how would the volatility of a cyclical company’s share price compare to the volatility of its profits? If a bank increases its maturity mismatch, what happens to its economic spread before taxes and its economic spread after taxes (i.e., including the tax penalty)?
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