RT Journal Article SR Electronic T1 Explaining Stock Price Volatility with Terminal Value
Estimates JF The Journal of Private Equity FD Institutional Investor Journals SP 16 OP 25 DO 10.3905/jpe.2011.15.1.016 VO 15 IS 1 A1 Harlan Platt A1 Marjorie Platt A1 Sebahattin Demirkan YR 2011 UL https://pm-research.com/content/15/1/16.abstract AB Stock price volatility has become more extreme and, as a consequence, investor’s portfolios have grown more risky and many investors have given up on the stock market. Undoubtedly, geopolitical turmoil and natural disasters played a major role in heightening the volatility of equities. Another argument for this volatility is presented in this article: analysts’ near-uniform reliance on discounted cash flow methodology with its oversized terminal value estimate is responsible for large stock price movements, both upward and downward, when new information causes analysts to modify their assumptions.TOPICS: Private equity, volatility measures, analysis of individual factors/risk premia, statistical methods