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International Finance (concept of value in corporate finance )
Finance & Accounting
Pages 12 (3012 words)
INTERNATIONAL FINANCE (concept of value in corporate finance ) Section A – Academic Essay When trying to understand value, the following issue is likely to appear: are the elements of value standardized across environment of different characteristics? The answer to this question should be negative.
In the statement of Broughton in regard to value, reference is also made to risk, as influencing value. The methods used for pricing risk are analyzed below. At the same time, the different levels of risk related to different cash flows are explained. In this way, the concept of value, which is highly influenced by risk, is made clearer. Being aware of value, as part of business environment, and risk, it is easier to understand the criteria on which the identification of a firm’s future value will be based. At a first level, the statement of Broughton (2010) on value and its role in business should be critically analyzed. Then it would be possible to explain the interaction between value and risk, as these two concepts can highly affect business processes. In any case, reference should be primarily made to the context of value; then, its aspects would be easier understood. Abrams (2004) notes that a general definition of value cannot reflect the precise nature or the role of value. ...
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