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Book value per share |
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Book value per shareThe ratio of stockholder equity to the average number of stockholder equity. Book value per share should not be thought of as an indicator of economic worth, since it reflects accounting valuation (and not necessarily stockholder equity valuation).Book value per share Similar MatchesValue investingValue investingValue investing is something of a misnomer in many ways as no-one would knowingly buy shares in a company unless they thought that the shares were good value. However, in investment circles it has come to mean the purchase of shares that look cheap according to particular criteria. Historically, this has meant the purchase of shares in companies which have low price earnings ratios (P/Es), a high level of asset backing, or high dividend yields, or a mixture of all three. As such it is contrasted with growth investing, where the investor focuses only on the potential for future earnings growth and is prepared to pay much high P/E multiple.So the heart of value investing lies in comparing two figures:Current Market ValueMultiply the number of ordinary shares in issue by the current price of each share to produce the market capitalisation. You can look up the market capitalisation of a quoted company in the financial pages of most newspapers, and on many financial websites.Intrinsic Value of the CompanyThere is no single way of establishing what the value of a company should be. Instead, value investors use a number of different valuation techniques, based on asset values, dividends, earnings, cash flows and other financial criteria.When a value investor identifies a discrepancy between the Current Market Value and the Intrinsic Value (according to the criteria he chooses), and the first is lower than the second, he invests. When the gap between them closes, or reverses, he sells, and takes his profit. Intrinsic valueIntrinsic valueThe value of an option if it were to expire immediately with the underlying stock at its current price; the amount by which an option is in-the-money. For call options, this is the difference between the stock price, if that difference is a positive number, or zero otherwise. For put options it is the difference between the striking price and the stock price, if that difference is positive, and zero otherwise. See also: In-the-Money, Time Value Premium, Parity. Market valueMarket valueIn relation to a listed security, the middle market quotation for that security as derived from the Daily Official List on the relevant date. Value at riskValue at riskThe maximum percentage of value likely to be gained or lost as the result of normal price movement, typically over one day. Under-valued currencyUnder-valued currencyThe situation of a currency whose value on the exchange market is lower than is believed to be sustainable. This may be due to a pegged or managed rate that is below the market-clearing rate, or, under a floating rate, it may be due to speculative capital outflows. Contrasts with over-valued currency. Further SuggestionsRelative valueMarket Value Approach Loan value enterprise value net asset value fair value book value time value F Fair Market Value Value at risk model (VaR) net present value value Value quota Expected value Net present value rule Labor theory of value Net present value Exercise value Liquidation value Hidden values Stored-value card surrender value hidden values Value Added Theoretical value |
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