Tuesday, May 27, 2014

Week 8 Discussion

Stock Valuation

Stock valuation is the process of discounting future cash flows. This process is important because you need an estimate of the stocks worth. What other factors determine the price of the stock?

47 comments:

  1. Company profitability, Company growth forecasts, Liquidity, and Market Confidence are the factors that determine the price of the stock.

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    1. I agree because if a company doesn't make profit then their stock prices will drop.

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    2. profitability is the number one thing to look at, this is the number one thing

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    3. Most definitely...Profitability is a factor to keep strong focus on

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    4. These factors are important as well, when determining the price of the stock. The intrinsic value, as discussed in class, also plays a key role in the price.

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    5. I agree with your statement about market confidence because if investors are not confident in a company, then they would start selling the stock and the the price would drop because it would seem like everyone is selling them

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    6. Don't forget about the value of a convertible bond as debt because that also determines the price of the stock, it shows the price of the bond if it wasn't converted into stock.

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  2. Investor demand, supply and demand, companies earnings, dividends paid, economy conditions, and the news can have an impact on price.

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    1. I agree demand for the service and or product are important to think about when pricing stocks

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    2. "Media" does play a major part in decision making of this type. thanks

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    3. Most definitely@Shine "Media" has a big impact on decision making of this type

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    4. Like I said before you also shouldn't forget about that particular stock and how that stock is doing as far as the market it's in, a high demanded stock price either rises or falls according to how many investors want to have shares of the stock.

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  3. the price of a stock is determined by the companies growth in the market. the price of the stock , how many shares are available and if anyone want to buy the shares at the current price.

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    1. Very good answer Barbara! I believe companies growth in the market should be a main factor when determine the price of stocks.

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    2. Barbara,

      After taking the "company's growth in the market, the price of the stock, and how many shares are available and if anyone want to buy the shares at the current price" it is important to create a valuation for that stock. Price-to-earnings ratios are used to measure the value of stocks.

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    3. You're right also because if no one wants to buy the stock then the price of the stock will decrease because of it's demand in the market.

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  4. a couple key factors when determining the price of a stock are market sentiment, growth expectation, forecasting, and risk, there are many more but these are some key ones to look out for and look at.

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    1. yes forecasting is very important when it comes to stocks because if the future doesn't look good for a company it will have a major impact on their stock price.

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    2. Of course, risk is an important fact to take into consideration. thanks

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    3. Definitely forecasting is very important...those predictions of the future regarding your stocks has a very important part in your finances

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    4. As many people who follow the market are aware, stock prices can be extremely volatile.

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  5. Some other factors include: Market sentiment, growth expectation, Valuation, momentum and bank activities.

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    1. Good answer Shine Bright! There are so many factors that are needed to determine the price of stocks.

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  6. Some other factors needed to determine the price of stocks are investor's rate of return, annual growth of stock, and current dividend

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    1. I agree Corey! Each of the factors you have giving does determine the price changes in each stock.

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    2. Thanks for the comment Dearrell!

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    3. I agree Corey, because these factors indicate whether the investor, if he already owns the stock, should sell. It also shows whether or not the investor should make the investment.

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  8. From learning about the stock market and how it functions, I believe the main factors that can drive stock prices is the demand of the investors, earnings, and the economy. However, this factors can be changed because stock prices are very volatile.

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    1. Dearrell,

      One important factor to take into consideration is how stock market perceives information. This can impact the stock value of a company. Furthermore, stock prices are affected by demand as well.

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    2. When a firm wishes to sell its stock in a primary market, it has many alternatives. One is to offer its shares for sale to general public. Two is new shares that are sold to existing shareholders and a private placement is the firms selling new securities directly to an investor or group of investors. The investors gain by profiting on a price of a stock.

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    3. I agree with the demand of the investors because is the proportional to four factors such as earnings, economy, expectations and emotions.

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    4. Once on the secondary market where investors buy and sell from each other, there are a lot of things that can come into play when it comes to pricing stocks.

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  9. The other factors that determine the price of the stock are, the future dividends, the company's growth rate, the expected return on the market, an approximation of the company's systematic risk, and the ratios associated with the company.

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    1. I have to agree that risks can also affect the price of stock.

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  10. Factors that determine the price of the stock include earnings per share and valuation. Earnings per share is the owner's return on his or her investment and valuation determines the price you are willing to pay for the future stream of earnings. Other important factors to take into serious consideration are economic strength of market, market trends, liquidity, and a perceived risk of the stock.

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    1. The valuation of stock is a key factor because it determines whether the stock is worth it. The economic strength of the market is great to because you need to know have the market rushed its peek.

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    2. I agree because everything is based on the economy strength if the economy is very bad you are willing to loose a lots of money if you not how the market is operating.

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  11. Other factors that determine the price of stock is outstanding shares, outstanding shares, treasury stock and issued shares. These are important elements of a common stock issuance.

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  12. Bonds, convertible bonds, nonconvertible debt, and value of the bond of stock also determines the price of the stock because the price of the stock varies according to the company's debt and revenue.

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    1. I do agree bonds and convertible bonds because you are able to convert into preferred stock and it gives you greater dividends.

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  14. The other factors that determine the price of the stock are the value of the stock and the growth of dividends that will be payed and the required rate of return. Also if the valuation exceeds the price, buy the stock. If the valuation is less than the price, sale the stock.

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    1. I agree Janette,its always good to sale the stock if the price exceeds the stock price because that shows that a profit was made to the investor.

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  15. the price of the stock determine by a number of things everyday such as economy down fall, expectation of the stock, public traded companies, the company profitability and basic human emotions such as people are fear of agreed because they don't want to spend a lots of money on the stocks in the market not doing to well.

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  16. Other factors in valuating a stock are profitability. As well as earnings per share this plays a factor in valuating stock price.

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  17. Company Profitability: A company's profitability is a major factor for determining its stock price. A company with a high profit margin will have a higher share price because larger profits mean higher dividend payments to the shareholders.

    Company Growth Forecasts: The expected growth rate of earnings to a company is another factor used to value a stock. This is because investors value a company based on its potential future earnings as well as its current profits.

    Market Confidence: During a recession, investors pull out of the stock market as they lose confidence in investments and prefer the safety of cash. This causes stock prices to drop. A company's share price will be affected by the confidence of the overall market and will trend in the direction of the overall economy.

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