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From point through density valuation to individual risk assessment in the discounted cash flows method
Author(s) -
Dec Marcin
Publication year - 2021
Publication title -
international journal of finance and economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 39
eISSN - 1099-1158
pISSN - 1076-9307
DOI - 10.1002/ijfe.2084
Subject(s) - valuation (finance) , discounted cash flow , cash flow , economics , actuarial science , toolbox , risk appetite , terminal value , econometrics , point (geometry) , financial economics , operating cash flow , finance , risk management , computer science , mathematics , geometry , programming language
We review the developments and practice of the discounted cash‐flow method in finance with an intermediate goal of presenting parsimonious methods of generating density valuation rather than point forecasts. Our ultimate aim is to select, propose and discuss some density‐based risk measures that may be used by appraisers and investment analysts when conducting discounted cash‐flow valuation for broad group of heterogeneous (by risk appetite) final users or investors. Such a toolbox may be applied directly by the latter group without necessity to rely on aggregated point valuations and recommendations.