Tackling Basic Interview Questions
Looking for a quick discussion around the best and most comprehensive answers around the following :
i) How do you value a company? where do you start?
ii) Where do you think interest rates will be 1, 2 years from now?
Thanks in advance and look forward to your responses.
interest rates will be up/down/sideways from here in 1/2/yrs from now. there is really no right answer to this question just explain your intuition and you should be fine.
so many menthods and so many ways to skin the cat....how do you very clearly state your understanding of valuation?
start by mentioning that the most common valuation methods are dcf, multiples and comparable transactions analysis. each has their pro/cons and usability depends on the circumstances, however dcf is the most rigorous. end by saying that value is subjective :P
using multiples and comparable transactions? sounds similar to me?
In the following order:
Multiples (normally firm, but for financial companies, use equity multiples), comp-acq's, DCF, DDM, LBO (but make sure you understand the circumstances in which each is used)
IR globally increasing in unison, a trend not seen since Japan's price environment experienced deflation in the mid-90's - unique set of circumstances as inflation is being caused by external pressure, not by excess liquidity in the economic system - interest rates will definately come down early next year, and will continue to do so...unless there is some external event that provides contrarian view.
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