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Session 17: Deconstructing Pricing - Consistency Tests and Playing Moneyball
Description
In this session, we continued with our discussion of multiples, starting with the definitional test, where you check for consistency. During the session, we also played Moneyball with the data and then extracted the variables that determine each multiple and noted that they have asymmetric distributions, making averages untrustworthy and medians more meaningful. If you are disciplined about following this process, you will find multiples much more useful and have an easier time controlling for differences.
Start of the class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/relval1test.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr21/session17slides.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session17Atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session17Asoln.pdf
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