PT  - JOURNAL ARTICLE
AU  - Harlan Platt
AU  - Marjorie Platt
AU  - Sebahattin Demirkan
TI  - Explaining Stock Price Volatility with Terminal Value<br/>Estimates
AID  - 10.3905/jpe.2011.15.1.016
DP  - 2011 Nov 30
TA  - The Journal of Private Equity
PG  - 16--25
VI  - 15
IP  - 1
4099  - https://pm-research.com/content/15/1/16.short
4100  - https://pm-research.com/content/15/1/16.full
AB  - Stock price volatility has become more extreme and, as a consequence, investor’s portfolios have grown more risky and many investors have given up on the stock market. Undoubtedly, geopolitical turmoil and natural disasters played a major role in heightening the volatility of equities. Another argument for this volatility is presented in this article: analysts’ near-uniform reliance on discounted cash flow methodology with its oversized terminal value estimate is responsible for large stock price movements, both upward and downward, when new information causes analysts to modify their assumptions.TOPICS: Private equity, volatility measures, analysis of individual factors/risk premia, statistical methods