2. Prove the DCF method of valuation is equivalent to the replicating method of valuation. Specifically,...
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2. Prove the DCF method of valuation is equivalent to the replicating method of valuation. Specifically, PV = 1 + rp + PV = a + b E (C) Cov (vy, Fm) PV Var (fm) where b = - (E (m) - rf) Cov(C,m) Var() and a= E(C)-b[1+E()] 1+rg (DCF) (Replicating) 2. Prove the DCF method of valuation is equivalent to the replicating method of valuation. Specifically, PV = 1 + rp + PV = a + b E (C) Cov (vy, Fm) PV Var (fm) where b = - (E (m) - rf) Cov(C,m) Var() and a= E(C)-b[1+E()] 1+rg (DCF) (Replicating)
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The Discounted Cash Flow DCF method and the replicating method of valuation ... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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