Commonly Used Method Of Valuation Of Investments In Securities And Applicability

Since October 2007 the Shanghai A-Share Index quickly declines from 6124 points to 1664 points in October of this year. The majority of ordinary investors suffered heavy losses in the stock market, and whose value has shrunk sharply. Even if having a large number of analysts the investment funds are no exception. In the face of such tragic decline of the stock, people have to re-examine the stock market, and have to re-examine the method of valuation of stock!This paper chooses 8 kinds of valuation methods that are used broadly, including 3 absolute valuation methods and 5 comparative valuation method, which are DCF, EVA, Option, PE, PB, PS, EV/EBITDA, and PEG. The Chapter Two introduce and comment on each valuation method, and discussed their theoretical applicability in the stock market of China. Chapter three does empirical research on DCF.PE, PB methods.This article concluded that the method of valuation is no merits. Different industries or different company should use different methods of valuation.