A stock's expected return is estimated by estimating its future value. These future values are derived by:
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A. B. C. D.Explanation
A stock's expected return is estimated by estimating its future value. These future values are derived by predicting the stock's earnings per share and expected earnings multiplier. The earnings per share is a function of the sales forecast and the estimated profit margin while the earnings multiplier is a function of the estimated P/E ratio (based on industry and market comparisons) or the estimated dividend-payout ratio, the required rate of return and the rate of growth.