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How do STRET and TARG work together when buying a share?
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Last Updated
1st of July, 2008

Consider a stock with a current price of $10 and suppose that in the Scenario Analysis page STRET gives an estimated return of $12%. (The STRET calculations are at the bottom of the page on the left hand side of the Scenario Analysis.) If you decide that you want a return of 15% before buying the stock, then enter 15% into the TARG calculations. (These are at the bottom on the right hand side.) These calculations will give you a figure lower than $10 since to achieve a higher return of 15% you will need to pay a lower price. The general relation is that the higher the required return (STRET), the lower the price (TARG) that you need to pay.

The same applies to STRETD and TARGD.

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