What are two major approaches used to value stocks?
A)Discounted cash flow techniques and absolute valuation techniques
B)Discounted cash flow techniques and relative valuation techniques
C)Compound free cash flow techniques and relative valuation techniques
D)Markowitz diversification techniques and relative valuation techniques

Question

Quizplus · Accepted Answer

The two major approaches used to value stocks are discounted cash flow (DCF) techniques and relative valuation techniques. DCF techniques involve predicting future cash flows and discounting them back to their present value, while relative valuation techniques involve comparing the stock price to similar companies or multiples such as price-to-earnings ratios. Absolute valuation techniques are not commonly used in stock valuation. Compound free cash flow techniques and Markowitz diversification techniques are not commonly used to value stocks.

What Are Two Major Approaches Used to Value Stocks