Abstract: LEARNING OUTCOMES After completing this chapter, you will be able to do the following: Explain the terms of the Cobb-Douglas production function and demonstrate how the function can be used to model growth in real output under the assumption of constant returns to scale. Evaluate the relative importance of growth in total factor productivity, in capital stock, and in labor input given relevant historical data. Demonstrate the use of the Cobb-Douglas production function in obtaining a discounted dividend model estimate of the intrinsic value of an equity market. Evaluate the sensitivity of equity market value estimates to changes in assumptions. Contrast top-down and bottom-up forecasts of the earnings per share of an equity market index. Explain and critique models of relative equity market valuation based on earnings and assets. Judge whether an equity market is under-, fairly, or overvalued based on a relative equity valuation model.
Publication Year: 2011
Publication Date: 2011-05-09
Language: en
Type: article
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