Topic 9 EquityValuation1

Topic 9 EquityValuation1 - Topic 9: Equity Valuation FIN...

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Unformatted text preview: Topic 9: Equity Valuation FIN 4504 Aaron Gubin Overview Methods for measuring intrinsic value Dividend models Multiples FCF models Comparables Fundamental Analysis Purpose: identify mispriced securities Data Edgar Firm disclosures 10-K, 10-Q, etc. Financial websites Intrinsic Value What do firm owners want? How does the firm reward its owners? Dividends and/or capital gains Present value of a firms expected future net cash flows, discounted by the required rate of return Expected Holding Period Returns Dividend Discount Models Generalizing the concept of the expected holding period returns to all future periods Constant Growth (Gordon model) Valid only when g<k Gordon DDM Implications g must be less than k. Why? Stock value is greater when: Dividend/share are higher Market capitalization rate, k, is lower...
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This note was uploaded on 12/03/2009 for the course FIN 4504 taught by Professor Banko during the Fall '08 term at University of Florida.

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Topic 9 EquityValuation1 - Topic 9: Equity Valuation FIN...

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