. Market Approach – It is a method of determine appraisal value of an asset, based on the selling price of a similar item. It is in fact a business valuation method that can be used to calculate the value of property or can also be used as a valuation process for a closely held business. It involves public company comparable and precedent transaction. Some of the most commonly used multiples for comparison are as follows.
• Price to Earnings
• Enterprise value/ EBITDA
• Return on Equity
• Return on Asset
• Price to Book value
3. Asset Approach – An asset based approach is type of business valuation that focuses on a company’s net asset value or the fair market value, of its total assets minus its liabilities to determine what it would cost to recreate the business it is subjective as to which of the company’s asset and liabilities to include in the valuation and how to measure the worth of each.
Apart from the above mentioned valuation that helps in determining the value of the stock in order to help the investor in making the investment decisions, there are a few physiological factors that may majorly influence the investors behaviour or decision irrespective of the actual stock market situation or the asset value.
Physiological Factors- It means Thoughts, Feelings, and others cognitive characteristics that influence the behaviour, attitude, and functions of the persons mind. The physiological factors that describe the individual investor behaviour will depend on the person’s personality and his characteristic. The below mentioned are few physiological factors that may influence the investor behaviour
a. Over confidence