Critical step employed in using relative valuation technique

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1. What is the expected return on the following portfolio? Stock $ Invested Expected Return CDE 80,000 6% LMN 40,000 16% WXY 50,000 17%.

2. Suppose you buy a stock for $44.73, receive a dividend of $4, and sell it for $39.33. What is your total rate of return?

3. What reserve requirement would you put on banks? Why? Does the type of loans the banks make affect your decision?

4. Explain why examining the earnings quality is important in valuation even though one uses cash flows for valuing projects and firms.

5. List and explain the critical steps employed in using relative valuation techniques.

Reference no: EM131351541

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