Question: 1.Using Yahoo Finance data, estimate the value for the stock using Relative Value Ratios.Show your computations. The stock is JP Morgan and I have to

1.Using Yahoo Finance data, estimate the value for the stock using Relative Value Ratios.Show your computations.

The stock is JP Morgan and I have to use P/E, P/BV, P/CF and P/Sales ratios to establish a price and then a target price, I'm not sure how exactly to do it

Current Share price: 102.41

Value based on P/E= 13.71 (PE Ratio) * 7.71 (eps)= 105.70

Value based on P/BV= 76.92 (BVPS)*1.33 (P/B)=102.30

Value based on P/CF= Assets-Liabilities/Sharesoutstanding=20.12, 102.41/20.12=5.09 PCF Ratio

Value based on P/S= 2.7 (P/S) * 31.1 (sales/share)= $83.97

2.Determine a Price Target 1 year from now.Briefly explain your inputs and logic.

P/E=

3.Recommend an option hedging strategy based on your 1 year price target.Assume you own 1000 shares of the stock at the current market price.Select either a covered call strategy or a protective put strategy.Calculate the expected outcome in 1 year assuming the stock attains your 1 year price target.

4.Recommend a Bull Call Spread or Bear Call Spread based on your 1 year price target.Calculate the expected outcome in 1 year assuming the stock attains your 1 year price target.Use 100 contracts for your option quantities.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!