1.Define the P/E valuation method. Under what circumstances should a stock be valued using this method?
2.Compare and contrast the book value and liquidation value per share for common stock. Is one method more reliable? Explain.
3.Explain the difference between the discounted free cash flow model as it is applied to the valuation of common equity and as it is applied to the valuation of complete businesses.
4.Why is the replacement value of assets method not generally used to value complete businesses?
5.What is the operating leverage effect and what causes it? What are the potential benefits and negative consequences of high operating leverage?