Stock Expected Earnings Discount Model Analysis

Expected Discounted Return Model has been applied in the western countries for more than 60 years to evaluate the internal value of stock. During the recent years, China抯 investors have emphasized this model as an important way to exert portfolio investment analysis. However, how the feasibility of this model is in China抯 stock market and how to apply it becomes a question to the theoretical and practical circles. Western modern and mature stock markets are different from China抯. In this paper, I would like to do some comprehensive analysis and evaluation of the Expected Discounted Return Model based on the current situation and status of China stock market. Furthermore, I raise a practical stock investment method for decision. Eventually, I review the development of China抯 stock market briefly and pointed out the irregularity. Moreover, the ways such as strengthen the supervision, strict regulation on information exposure have been brought out. The thesis is divided into 8 parts. First, the Introduction tells us the objectives and purpose to analyze and study the Stock Expected Discounted Return Model. Second, make some theoretical analysis on the Expected Discounted Return Model. The Model is the important base for several other theories. A case study is in the process of analysis using Buffet抯 investment decision process in Coca Cola Company. Third, deeply study in the real issues and analysis are made to evaluate China抯 stock market. Some issues, such as choice standard of D value, calculation method of K and how forecast T. Fourth, comprehensive analysis on the Safety Factor, which is a really practical method to do investment decision. Clear introduction on how to use the data and deductions and inductions. Fifth, case study on Dongfang Electronics & Information Co Ltd in order to show how to practically use the Safety Factor Dynamic Theory. - Sixth, analysis on the restriction in practice toward the Safety Factor Dynamic Theory. It will be beneficial for us to grasp the restriction of using this method in reality and use more flexibly. Seventh, the illegal activities and tricks found in the stock market are detrimental to the healthy development of China抯 stock market. Several suggestions are made. Last, conclusion. Although the Expected Discounted Return Model is not a universally practical one on earth, it has been used and perfected by the successful investors m the West. Every theory will disappear if it does not develop itself all along. This is a fact proved by a lot of other f~ets. These are facts that the China抯 stock market is not clean and China, somebody believes that the other those markets, but China is developing and finally will become a mature and regular markets.