How do you reply back to a classmate post below? Please provide an answer. Thank

Question

How do you reply back to a classmate post below? Please provide an answer. Thank you in advance!

Great job with simplifying the answers to this week’s discussion. I seem to me that the formulas give us an easy way to determine the pricing of a stock or bond. Additionally, it helps with estimating the future returns. You provided a good example with the Microsoft stock. Based on the current data available from the markets, you determine the potential growth of the dividends in constant growth over the next five years. Lastly, I think that stocks are a better option to invest than bonds. I know there is a lot of volatility in the markets, but you can get a higher return.

Erick

Explanation / Answer

Thank you for your comments Erick.

The fundamental analysis and technical analysis of a stock help us to predict the future returns. The analysis on the Microsoft stock can help to determine the potential growth of the dividend in future by employing the constant growth model. We can predict the volatility of stock if we analyse each stock with the appropriate technique using formulas.

when compared to bond investment, stock is the best investment option if we are able to analyse and predict the future volatility of a stock.

Thank you

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