Understanding how to value a stock is crucial for making informed investment decisions. There are various methods for stock valuation, and two common approaches are:

• Dividend Discount Model (DDM): This method values a stock based on the present value of its future dividend payments. It’s often used for companies that pay consistent dividends.

• Price/Earnings (P/E) Ratio: This ratio compares a company’s stock price to its earnings per share. It gives an indication of how much investors are willing to pay for each dollar of earnings.

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Imagine you’re a part-owner of a company. That’s essentially what happens when you buy a stock. A stock is a share of ownership in a company, and those shares are bought and sold on stock exchanges. It’s like being a co-owner in a business.

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