Question: A business can be valued by capitalizing its earnings stream. How might you use the same idea to value securities, especially the stock of large

A business can be valued by capitalizing its earnings stream. How might you use the same idea to value securities, especially the stock of large publicly held companies? Is there a way to calculate a value which could be compared to the stock’s market price that would tell an investor whether it’s a good buy? What financial figures associated with shares of stock might be used in the calculation? Consider the per-share figures and ratios discussed in Chapter 3, including EPS, dividends, book value per share, etc. Does one measure make more sense than the others? What factors would make a stock worth more or less than your calculated value?

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