We used CAPM to determine a theoretically appropriate required rate of return of a stock A. If the E(Ri) from CAPM is 10%. In the real market, E(R) = 12%. We can say the the price of stock A is undervalued. (From CFA1, don't know if it's plausible in the real world equity market analysis) Questions: 1. What does the E(Ri) really represent. Say if a stock is $10 in t1. It's expected to be $11 in t2 with E(Ri) =10% ? 2. Why stock A is undervalued? An explanation is that it's related to discounted cash flow. Is it about the r-g in DDM model?
Trending Content - Investment Banking Forum
| +133 | Hot take: I’d rather be at Desjardins than UBS for investment banking in 2026 | 20 | 6h |
| +99 | Stop sleeping on UBS - it’s pretty good | 30 | 1h |
| +63 | 2026 VAULT PRESTIGE RANKINGS | 34 | 2h |
| +50 | Hardest interview experiences? | 37 | 5h |
| +43 | AI + Financial Modelling | 16 | 8h |
| +31 | Summer before college | 25 | 2d |
| +26 | Current State of UBS in North America | 8 | 5d |
| +26 | People who work/worked in FIG IB at a BB: does FIG really pigeonhole you as bad as people say? | 5 | 2d |
| +25 | How casual to be with first year analysts? | 10 | 5h |
| +23 | Cold apply for FT recruiting? | 5 | 6d |
Career Resources
Facere qui rerum tenetur autem. Ut eius accusantium et quod consequatur debitis rerum. Corrupti quasi placeat enim consequatur eos fuga.
Perferendis blanditiis minus commodi non eius maxime cumque reprehenderit. Iure numquam provident a qui nobis omnis. Voluptatem molestias dolor sunt reprehenderit nemo. Est quos quia doloremque. Aut cum quae sint excepturi. Voluptatem et consequatur cumque iusto impedit hic et sed.
Aut sed blanditiis enim repellendus corrupti voluptas nesciunt. Quia dolores dolorem atque doloribus nemo. Rerum fugiat velit pariatur dolor sit repellendus.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...