Discounted Cash Flow Illustration (Uncertain Cash Flows)

Discounted Cash Flow Illustration (Uncertain Cash Flows)

As they say: the secret of success is to buy low, sell high. In this video, Abdulla discusses techniques to reduce forecast errors when dealing with uncertain cash flows.
Overview

Discounted cash flow (DCF) valuation can be used to establish a fair price for an asset. It involves lining up future returns, discounting them at a required rate of return and adding them up. But there are some important nuances.

Key learning objectives:

  • What are some of the limitations to using DCF to establish a fair price?

  • How can investors account for uncertainty?

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Summary
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Expert
Abdulla Javeri

Abdulla Javeri

Abdulla’s career in the financial markets started in 1990 when he entered the trading floor of the London International Financial Futures Exchange, LIFFE, and qualified as a pit trader in equity and equity index options. In 1996, Abdulla became a trainer for regulatory qualifications and then for non-exam courses, primarily covering all major financial products.

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