
Valuation   • The process that links risk and return to determine the worth of an asset.   • The process of determining the current worth of an Asset or Security.    Embedded terms in definition   Asset Return Risk Security
   Referenced Terms   Book value per share: The amount per share of common stock that would be received if all of the firm's assets were sold for their exact book (accounting) value and the proceeds remaining after paying all liabilities (and preferred shares) were divided among the common shareholders.The ratio of stockholder equity to the average number of common shares. Book value per share should not be thought of as an indicator of economic worth, since it reflects accounting Valuation (and not necessarily market valuation).See Book Value.
  Constant growth model: Also called the GordonShapiro model, an application of the dividend discount model which assumes (1) a fixed growth rate for future dividends and (2) a single discount rate.A widely cited dividend Valuation approach that assumes that dividends will grow at a constant rate that is less than the required return.
  Current price / current eps.: Comparing it to the average PE ratio shows over or under Valuation of the company. Divide the current PE by the fiveyear average PE. If the result is 1 or less, the stock is undervalued.
  Gordon model: A common name for the constant growth model that is widely cited in dividend Valuation.
  Hedge fund: Are alternative investment vehicles. Hedge fund trading styles are quite variable from one fund to another. Some are Macro Funds which place positions on movements in broad economic groups such as currencies, credit, equity and derivatives markets. Others are more focused on narrow Specialties, such as Convertible Securities or Mortgage Backed Securities. These funds operate as limited partnerships. There are limitations on the number of partners, minimum financial standards and commitments, and liabilities.A fund that may employ a variety of techniques to enhance returns, such as both buying and shorting stocks based on a Valuation model.
   Related Terms   Constant growth dividend valuation gordon model Dividend valuation model


Tips for Trying to Fix a Clogged or "Frozen" Home Equity Line: For years, homeowners have turned to home equity lines of credit (HELOCs) as a way to borrow against their home's value to pay for college tuition, home improvements, medical bills and other major expenses. (A home's equity is the market value minus what is owed on the mortgage. If you owe $100,000 on your mortgage but your home is worth $250,000, your equity is $150,000.) More...

If you have an important point to make, don't try to be subtle or clever. Use a pile driver. Hit the point once. Then come back and hit it again. Then hit it a third time  a tremendous whack.  Winston Churchill, Sir (18741965)


