The Multiplier Approach for Estimating the Intrinsic Market Value of a Major

question 93

Multiple Choice

The multiplier approach for estimating the intrinsic market value of a major stock market series requires the following step(s) :

• A) Estimating the future earnings per share for the stock market series
• B) Estimating the appropriate earnings multiplier for the stock market series
• C) Estimating long-run required rates of return and growth rates
• D) Both a and b
• E) All of the above

---

Definitions:

Management Fee

A charge levied by an investment manager for managing an investment fund's portfolio of securities.

Incentive Fee

A fee charged by hedge funds equal to a share of any investment returns beyond a stipulated benchmark performance.

Incentive Fees

Incentive fees are payments made to fund managers for generating positive returns, usually a percentage of the investment profit above a specific benchmark.

Call Options

Financial derivatives that give the buyer the right, but not the obligation, to buy a specified quantity of an asset at a specified price within a certain time period.