This dissertation was written as part of the MSc in
Banking & Finance
at the International
Hellenic University.
In this thesis we develop an analytical framework for dealing
with uncertainty for the
practitioners that follow the investing strategy called value investing. We derive a
deterministic and a stochastic valuation formula that separate the different sources of
value of a company. We also provide alternative methodologies to the common risk
-
adjusting approach in order to deal with valuation risk
,
as well as
a quantitative approach
to apply the principle of Margin of Safety. Last, we conducted a case study for the public
company called “The Coca
-
Cola Company”
to illustrate the application of the framework
developed in the main body of the dissertation.
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