From point through density valuation to individual risk assessment in the discounted cash flows method

摘要

We review the developments and practice of the discounted cash-flow method in finance with an intermediate goal of presenting parsimonious methods of generating density valuation rather than point forecasts. Our ultimate aim is to select, propose and discuss some density-based risk measures that may be used by appraisers and investment analysts when conducting discounted cash-flow valuation for broad group of heterogeneous (by risk appetite) final users or investors. Such a toolbox may be applied directly by the latter group without necessity to rely on aggregated point valuations and recommendations.