Q1-1) Discuss four different methods of valuation, with a focus on their advantages and limitations.
Answer: There are several methods of valuations, below are just a few:
Discounted cash flow analysis (DCF) – this is considered one of the most thorough methods to value a company due to the fact that relies on free cash flows. There are two ways using the DCF method one, using the adjusted present value or the weighted average cost of capital, which shows a company how much capital is required for future income flow. Using this method gives us a more realistic thing to an intrinsic stock value, ratios may not give investors a clear value if the market is over/under valued. Some disadvantages would be that it’s based on future projections and assumptions if analysis do not have the abilities to make confident and sound future projection then this method could lead to disastrous future results. This method also viewed as a moving target and only for short term investing, requiring constant analysis and modifications.
Comparable Transaction Method – this method focuses on analyzing similar transactions in the past and the market values that are similar to the company that is being purchased or looking at being purchased. Companies can look at several transactions of similar companies to help them determine a value. This value is real data and not based on future projections. Some disadvantages of this method would be the lack of financial data among private companies and past transactions. This method relies on looking at comparable companies, this would pose as a problem if there were not any comparable transactions to the company being acquired.

Q1-2) Part 2 of 1 Answer:

Answer: The Dodd Frank Wall Street Reform and Consumer Protection Act was passed by President Obama in 2010. Due to the recession and financial crisis starting in 2007 a law was passed