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.

 
Best Response

In the following order:

  1. 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)

  2. 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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