Ranking Securities: Counting Methods for Deviation from Intrinsic Value

Counting Methods for Ranking Securities by Deviation from Intrinsic Value

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You wish to rank n different securities according to the deviation of the market price from your estimate of their intrinsic value. You are curious how many different ways this can come out. The counting method you should use is:

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The factorial method allows you to determine the number of ways of arranging n things. Initially, there are n choices for the first item, then n-1 for the second, and so on. The number of combinations is therefore n! = n * (n-1) * (n-2) * (n-3) * ... * (1).