Calculated Valuation vs. Market Price you have spent some time reading and evaluating the methods and calculation of the valuation of both bonds and equities (stocks), and in a related assignment are evaluation in detail the calculation methods and which factors are most important.

Ralph is a stockbroker, representing clients from his posh Manhattan office. When asked the question, which valuation method do you prefer for bonds and stocks, he noted the following:"

"Valuation smaluation! If I want to know the value of any bond, or any stock, I just look online and immediately and look up the market price NOW. There is never any need to fiddle around with any mathematics to know what a stock or bond's value is- it is worth what it costs to purchase it on the open market."

What you know about stock and bond valuation, do you agree with Ralph? 

Explain your rationale and belief based on what you have learned about financial statements, net present value, and bond and equity valuation calculations.

Answer rating: 100% (QA)

While market price is an important indicator of the current value of a stock or bond it is not the o... View the full answer