- Types of Risk –
There are two types of risk. What are these two types of risk and should investors be concerned about them? By what methods are these risks measured by analysts?
- Market Efficiency –
Are security markets efficient?
In formulating your response, provide evidence that demonstrates that markets are efficient; also, offer specific evidence that suggests that markets are not efficient?
Why is the view about market efficiency important to the valuation process?
- Risk-free Rate –
How should an analyst determine the risk-free rate that is to be used in any particular valuation assignment? Should length of the forecast period affect the selection of a rate?
