The Three Steps in Determining a Stock's Intrinsic Value Are

question 97

Multiple Choice

The three steps in determining a stock's intrinsic value are
I. estimating the stock's future cash flows.
II. estimating the risk associated with future cash flows.
III. careful analysis of patterns in the stock's recent price history.
IV. estimating an appropriate discount rate to apply to future cash flows.

• A) II, III and IV only
• B) I, II and IV only
• C) I, III and IV only

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Definitions:

Fund Balance

The net assets of a government fund, calculated as the difference between the fund's assets and liabilities, indicating the financial health or resources available to the fund.

Equity Method

An accounting method for recording investments in other companies, where the investment is initially recorded at cost and subsequently adjusted for the investor's share of the investee's net income or loss.

Partial Equity Method

An accounting approach used for investments in associates where the investment is recorded at cost and adjusted for the investor's share of profit or losses.