Investment pricing models for equity evaluation

Level: Undergraduate | Grade: 2:1 | Approx. Word Count: 1,150

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Overview

When evaluating the attractiveness of investment in a specific equity, the investor is likely to use a number of financial models for this purpose, among which the most prominent are WACC and CAPM.

The aim of the current paper is to examine the models that investors might use to access the potential value and return on their investment. In this context, the most commonly used model is the WACC. The paper will also consider the impact that interest rates have on investor decision-making and an assessment of the return on bonds