Stock Validation

Stock validation - Stock validation is the system used to determine the fair market value of a stock. The fair market value is the price that an investor is willing to pay and the price that a company is willing to sell on the open market. The stock validation is carried out by statistical formulas taking in many economic factors in consideration such as share prices, a company's net worth, gross national product, retail sales and consumer price index. There are several ways of calculating stock validation. The most common methods include the discounted cash flow method, which is a business appraisal method, and the P/E method (price to earnings), and the Gordon Method (also evaluates the company's growth.