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To: Michael Dean who wrote (8868)	4/15/2000 12:31:00 AM
From: Boplicity	Respond to of 24042

Mike, The market is ruled by perception. No one knows what the correct method will be used to value stocks or what other criteria will be acceptable to help influence investor perceptions after the selling stops. I do know one think, just because a stock has dropped far, does not make it cheap. Cheapness is relative. One of the worse reason to buy a stock is the buy because it has dropped far. Greg

To: Michael Dean who wrote (8868)	4/15/2000 1:03:00 AM
From: Ed Weider	Read Replies (1) \| Respond to of 24042

Another method, obviously a little more complicated is estimating the present value of future cash flow to calculate the expected return. You could find that info in the analyst's reports, it won't be clear but the data is there. I use an estimate of the ROE and then I punch in these figures. E(R)= ROE, Return on Equity B = Systematic risk: Beta coefficient Rf = RiskFree rate, [let's say 5.8%] Asset A's Expected Return = 25% Asset A's Beta = 1.65 Rf = 5.8% Formula: [E(R) - Rf]/B [25% - 5.8%]/1.65 = 11.64% Slope What this tells us is that Asset A offers a reward-to-risk ratio of 11.64%. In other words, Asset A has a risk premium of 11.64% per unit of systematic risk. Now by making the comparisons with other similar risk level companies you like conclude that Asset B, let's say has a Risk premium of 8.2%, is less attractive than Asset A. Remember we are talking about similar risk, don't put Genomic securities with Retail.