Corporate Finance 18

Corporate Finance 18 - investments. Calculated as:...

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DCF Approaches (Discounted Cash Flow) Dividend Discount Model Aka Dividend Growth Model Free Cash Flow to Equity This is a measure of how much cash can be paid to the equity shareholders of the company after all expenses, reinvestment and debt repayment. Calculated as: FCFE = Net Income - Net Capital Expenditure - Change in Net Working Capital + New Debt - Debt Repayment Free Cash Flow for the Firm A measure of financial performance that expresses the net amount of cash that is generated for the firm, consisting of expenses, taxes and changes in net working capital and
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Unformatted text preview: investments. Calculated as: Derivatives Options Call vs. put Buy Is call Sell is put Exercise/strike price is price at which holder can exercise contract Holder is buyer with right to purchase Seller is writer obligated to sell American is anytime European only on expiration date In the money Put: MP< ex price Call: In when mp>ex price Out of the money Call:ex price> mp Put: strike<mp Intrinsic value Determinant Value of Call Value of Put Stock Price, So +-Exercise Price, K-+ Time to expiry, t + + Share volatitity + + Interest rate, r +-Dividends paid-+...
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