Session 18: Intrinsic Value Closure and Pricing Beginnings
from Aswath Damodaran Hosted by Aswath Damodaran
In the context of valuing commodity companies, I talked about how Monte Carlo simulations can help deal with uncertainty. If you decide to go that route, you can use Crystal Ball (an add on to Excel and freely available to Stern students) to make your excel spreadsheet valuation into a simulation. Finally, in the context of talking about value vs price, and the efficient market view of the gap, I mentioned a documentary on efficient market investing. Here is the WSJ article linking to it:https://www.wsj.com/finance/investing/investing-david-booth-errol-morris-documentary-4dd7ff80?mod=wsjhp_columnists_pos_3 We then moved on to the gap, the different views of the gap and why that gap might or might not close. In the second part of the class, we turned to pricing, and laid the framework for thinking about multiples as standardized prices, and why it is critical that we make sure that they are consistently defined and uniformly estimated.Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relval1test.pdfSlides: https://nyu.box.com/s/n3afpimdjmu4yqlhguq0nh74xmpfiuswPost class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session18Btest.pdfPost class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session18Bsoln.pdf
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