The process of fundamental valuation requires estimates of all the following factors, EXCEPT for the
A) time pattern of returns.
B) economy's real risk-free rate.
C) risk premium for the asset.
D) times series of stock prices.
E) expected rate of inflation.

Question

Quizplus · Accepted Answer

The time series of stock prices is not a factor that needs to be estimated in the process of fundamental valuation. The other factors listed (time pattern of returns, economy's real risk-free rate, risk premium for the asset, expected rate of inflation) are all essential components in estimating the intrinsic value of an asset.

The Process of Fundamental Valuation Requires Estimates of All the Following