Risk-Neutral Valuation Stephen M Schaefer London Business School March‚ 2012 Outline • The no-arbitrage principle • Arrow-Debreu (A-D) securities and market completeness • Valuing options with one period to maturity via replication using underlying asset and borrowing / lending replication using A-D securities risk neutral probabilities • Valuing options with several periods to maturity Understanding Risk Neutral Valuation 2 No-arbitrage pricing Understanding Risk Neutral Valuation 3 Arbitrage
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Equity Valuation Lecture Map Definitions of Value Book value‚ Liquidation value‚ Intrinsic value‚ Market value Dividend discount models Constant-growth Multi-stage growth Value Metrics and Determinants of Value Current earnings and growth P/E Lesmond 1 Book Value of Equity The firm’s equity value‚ or stock value‚ is stated right on the firm’s books This is NOT the market value of equity Book value per share of Equity is the value of common equity on the books‚ divided
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Table of Contents Company Profile 2 Firm’s Economic Environment 2 Exchange rates 2 Inflation 2 Interest Rates 2 GDP Growth Rate (YoY) 3 Population 3 The influence of economic environment on firm’s historical performance 3 The influence of economic environment on firm’s future performance 3 Industry Analysis 3 Rivalry between existing firms 3 Threat of new entrants 4 Threat of substitute products 4 Bargaining power of customers 4 Bargaining power of suppliers 4 SWOT Analysis 5 Key successful factors
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* Cleaned the weld chamfers free from rust preventive coating. * Welded erection irons (20 Nos) on both sides of the joint & pulled the sections together by draw bolt. * Adjusting irons are welded in between the erection irons where shell overlap was found. * Checked the alignment of the shell with Piano wire arrangement. * Gap of 3mm maintained in between the shell joint. * Strong backs will be welded on one shell after initial alignment. * Took polar readings on
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targeted at women in the middle to high-end markets. The company has 115 million shares outstanding with a current market price of $5.63 per share. The company is expected to show net income of $33 million in the next 12 months. Forecast sales and EBITDA are $615 million and $57 million‚ respectively. Debt outstanding is $140 million. (Show all your work for credit). a. Do you think that the list below represents valid comparable companies? b. What is the current enterprise market value of Pellagia
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uncertainty in valuations for investment purposes A brief guide for users of valuations Nick Bywater MRICS rics.org/valuation This guide is prepared for the benefit of valuers and other users of valuations to provide a general understanding of the concept of uncertainty and the methods by which uncertainty‚ in valuations for investment purposes‚ may be identified and communicated with clarity. It is not intended to provide training in valuation techniques but rather to give valuation surveyors
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Carrie Simmons IRR v. MIRR Valuation Methods Bus 650 Managerial Finance Kristi Rayford February 7‚ 2012 1. Abstract The Internal Rate of Return (IRR) and Modified Internal Rate (MIRR) of Return are imperative to understanding the investment on a project and the expected returns or profitability. Under the valuation method of IRR is to accept the project which has the greater number of required rate of return‚ or otherwise‚ reject the project. However‚ MIRR is better indicator
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Firm Valuation Project Wal-mart (WMT) The purpose of this report is to find the intrinsic value of a company. We choose Wal-Mart Stores for our analysis. FCF calculation First‚ we retrieved the financial statements of the company for the last five years (2005-2010) from www.sec.gov website. Based on this information‚ we calculated the Average annual growth rate for Wal-mart to be 9.27% and the Compound annual growth rate to be 9.26%. Then we found the projected sales for 2010 to be
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The formation of cement clinker minerals are basically by solid phase reaction. On the premise of the raw materials in the same chemical and physical properties‚ the same degree of homogenization‚ the same rotary kiln calcining temperature and time‚ the solid phase reaction speed is proportional to the fineness of raw material. The larger its specific surface area is‚ the greater the contact area between the particles is‚ at the same time‚ the finer of the raw material is ‚ the greater the surface
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104-M43 Fast-Track Construction with Slag Cement Concrete: Adiabatic Strength Development and Strength Prediction by Stephanie J. Barnett‚ Marios N. Soutsos‚ John H. Bungey‚ and Steve G. Millard The early-age strength development of concrete containing slag cement has been investigated to give guidance for its use in fasttrack construction. Measurements of temperature rise under adiabatic conditions have shown that high levels of slag cement— for example‚ 70% of the total binder—are required
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