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Introduction:
In previous chapter we analyzed three traditional approach to forecasting earnings. Here, this chapter is attempt to also measure risk associated in forecasting with help of following three methods:
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Trend Analysis
Trend analysis of time series utilization regression analysis. Best fitted line used to understand trend or pattern of any variable. Straight line trend is simple linear regression model.
Decision Trees
Traditional methods not contains probability of occurrences. Decision Tree contains different alternative with different probability, which helps in taking decision. Example Generating necessary inputs.
Growth Stock Approach Undervalued Stock Approach (Out of favor stocks) Small Capitalization Approach Market Timer Approach Index Fund Passive stocks
Projecting Dividend