+852-2971 6121 ■ peter.suozzo@ubsw.com Stephen Cooper +44-20-7568 1962 ■ stephen.cooper@ubsw.com Issue 1 This is the first in a series of primers on fundamental valuation topics such as discounted cash flow‚ valuation multiples and cost of capital. This document explains how to calculate and use multiples commonly used in equity analysis. Gillian Sutherland +44-20-7568 8369 gillian.sutherland@ubsw.com Zhen Deng +1-212-713 9921 zhen.deng@ubsw.com ■ We discuss the differences between equity
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s peter.suozzo@ubsw.com Stephen Cooper +44-20-7568 1962 s stephen.cooper@ubsw.com Issue 1 This is the first in a series of primers on fundamental valuation topics such as discounted cash flow‚ valuation multiples and cost of capital. This document explains how to calculate and use multiples commonly used in equity analysis. Gillian Sutherland +44-20-7568 8369 gillian.sutherland@ubsw.com Zhen Deng +1-212-713 9921 zhen.deng@ubsw.com s We discuss the differences
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in Valuation: Estimating Terminal Value Chapter 13: Dividend Discount Models Chapter 14: Free Cashflow to Equity Models Chapter 15: Firm Valuation: Cost of Capital and APV Approaches Chapter 16: Estimating Equity Value Per Share Chapter 17: Fundamental Principles of Relative Valuation Chapter 18: Earnings Multiples Chapter 19: Book Value Multiples Chapter 20: Revenue and Sector-Specific Multiples Chapter 21: Valuing Financial Service Firms Chapter 22: Valuing Firms with Negative Earnings Chapter
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EQUITY VALUATION MODELS Equity Valuation -Determining the total value of a company involves more than reviewing assets and revenue figures. An equity valuation takes several financial indicators into account; these include both tangible and intangible assets‚ and provide prospective investors‚ creditors or shareholders with an accurate perspective of the true value of a company at any given time Significance of Equity Valuation Model -Equity valuations are conducted to measure the value of
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Anomalies to Efficient Market Hypothesis and the extent to which they can be explained by behavioural finance theories Finance that is based on rational and logical theories‚ such as the capital asset pricing model (CAPM) and the efficient market hypothesis (EMH). These theories assume that people‚ for the most part‚ behave rationally and predictably. The Efficient market hypothesis assumes that financial markets incorporate all public information and assets that share prices reflect all relevant
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3a) A security with only diversifiable risk has expected return that exceeds the risk-free interest rate. This statement is inconsistent with both. Why? Only diversifiable risk implies no undiversifiable (market) risk. Thus‚ this is a zero-beta security‚ which is expected to earn the risk- free rate. If it has higher expected return than the risk-free rate‚ this is not consistent with CAPM. It is above the SML and underpriced‚ In an efficient market‚ savy investors would buy this stock pushing
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A REVIEW OF STUDIES CONDUCTED ON THE WEAK FORM OF THE EFFICIENT MARKET HYPOTHESIS ON EMERGING CAPITAL MARKETS Surabhi Kothiyal (2009B3A8360P) Vishnukaant Pitty (2009A4PS340P) 1 CONTENTS PAGE NO. 1. Introduction 3 2. On Emerging Markets … 5 3. Empirical Methods 8 3.1. Non-Parametric Tests 8 3.1.1. Kolmogrov Smirnov Goodness of Fit Test 9 3.1.2. Runs Test 9 3.2. Parametric Tests 10 3.2.1. Auto-Correlation Test 10 3.2.2. ADF (Augmented
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governance issues that may arise under the Japanese Keiretsu system from the perspective of a) financiers b) owners c) suppliers and d) employees. 2. What is the fundamental value of NECE shares? Provide a valuation and a justification of how you calculated it. 3. Is NECE a good investment? How does the price of its shares compare to their fundamental value? Come up with at least two different sets of reasons why these two values may be different. 4. If you were a minority shareholder‚ what would you pay
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buy Nike’s shares. The opinions from the analysts of the industry were mixed‚ which prompted her to do a discounted cash flow analysis. However‚ she was uncertain about the cost of capital to be used for this analysis. She asked her assistant‚ Joanna Cohen‚ to estimate Nike’s cost of capital. Below is what Joanna did and our comments on it. Our Views on Joanna’s Analysis 1. Single or Multiple cost of capital? The argument provided by Johann Cohen seems appropriate and well-reasoned. Even
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Analysis of the Kellogg’s organisation and discussion of the modelling methods used Introduction Below is a financial report analysing whether the Kellogg’s company (K) is worthy of investment. To do this I will examine their historical data and financial information; then from these‚ make calculations and model the company’s situation (This information report was obtained from http://uk.finance.yahoo.com). After calculating the models I will be able to compare them with the actual stock
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