What constitutes the calculation of a premium ?



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What constitutes the calculation of a premium in establishing a Market Value over the Book Value?

1 Answer(s)


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The market value premium is determined by the stock market. There is no science behind this.

The market premium depends on various factors including company performance, competition, macro economic factors, local politics etc.

So the bottom line is there are many kinds of value for a company - book value, market value, DCF value, comparables value.

Bankers typically look at all these valuations before finalizing on the valuation of a company