Learning outcomes
- Understand what the Target Return represents in Investment Worth analysis
- Distinguish the Target Return from Market Yields, discount rates, and IRR hurdle rates
- Learn why Worth analysis begins with a single, portfolio-level required return
- Recognise how the Target Return anchors the comparison between Worth and Market Value
Description
Investment Worth is a tool for evaluating whether:
- the market price offers sufficient return relative to the investor’s required return,
- the investor is overpaying or under paying relative to their objectives.
Worth is therefore a private, investor specific calculation that is not intended to match Market Value.
The Target Return is the anchor for this comparison by providing the investor-specific rate used to discount expected cash flows under Worth analysis.
