Economics Homework Help

There are multiple methods that can be used to determine a stock’s intrinsic value. These can include utilizing such factors such as dividend streams, discounted cash flows, residual income, comparable companies’ analysis, etc. 

1- Select at least one approach and explain why you feel that is a good method for determining the intrinsic value of a stock.

2-Then, select a publicly traded company in Saudi Arabia, and use your selected method to determine what you consider is its intrinsic value and illustrate whether you feel the stock is underpriced, overpriced, or fairly price.

3- Explain why these concepts are important to business leaders in Saudi Arabia and Saudi Vision 2030.

Required readings:

Chapter 8 in Foundations of Finance – The Valuation and Characteristics of Stock(attached)

Attia, M., Lassoued, N., & Sassi, H. (2019). Financial reporting timeliness and the value relevance of earnings: Evidence from banks in the MENA countries. The International trade journal, 33(3), 277-301. https://doi.org/10.1080/08853908.2018.1459212 

Ahmed, H., & Elsayed, A. H. (2019). Are Islamic and conventional capital markets decoupled? Evidence from stock and bonds/sukuk markets in Malaysia. Quarterly Review of Economics and Finance, 74, 56-66. https://doi.org/10.1016/j.qref.2018.04.005

Jain, S., Agarwalla, S. K., Varma, J. R., & Pandey, A. (2019). Informed trading around earnings announcements—Spot, futures, or options? The journal of futures markets, 39(5), 579-589. https://doi.org/10.1002/fut.21983 

Cheng, C.-M., YiHou, H. A., & Hu, M.-C. (2019). Investor Attention and Stock Price Movement. The journal of behavioral finance, 20(3), 294-303. https://doi.org/10.1080/15427560.2018.1513404