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Finance

1. The stock valuation approach uses discounted cash flows concepts to calculate the theoretical value of a stock. The most popular academic approach is the dividend growth model.

If a stock does not pay a dividend, this model cannot be used. What might be an alternative method or approach to valuing a stock if it does not pay a dividend? You may find doing some research might be helpful to answer this question

2. So assume you are the treasurer and your boss, the CFO, tells you to invest in a highly risky instrument which you think can endanger the company if it goes bad. What would you do and why?

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1. The stock valuation approach uses discounted cash flows concepts to calculate the theoretical value of a stock. The most popular academic approach is the dividend growth model.

If a stock does not pay a dividend, this model cannot be used. What might be an alternative method or approach to valuing a stock if it does not pay a dividend? You may find doing some research might be helpful to answer this question.

Some other ways in which to calculate stocks are important. These include that of EPS or Earnings Per Share, Price to Earnings, ...

Solution Summary

This solution discussed stock valuation and role-played as a CFO.

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