BOND VALUATION
Bond
Bond is a long term contract under which a borrower agrees to make payments of interest and
principal, on specific dates, to the holders of the bond
Key characteristics:
VB = value of a bond/bond price
M = par or maturity value of the
TIME VALUE OF MONEY
(Discounted Cash Flow Analysis)
DISCOUNTING
1. Single payment (one cash-flow)
1.1. Annual discounting
Annual discounting= the process of finding the present value of a single payment with an annual
interest calculation
First, we calcul
TIME VALUE OF MONEY
(Discounted Cash Flow Analysis)
INTRODUCTION
This concept implies a different value of monetary units in different time units. Namely, despite an
identical appearance, a dollar in hand today is worth more than a dollar to be received i
ANALYSIS OF FINANCIAL STATEMENTS
Introduction
Financial statement analysis is defined as the process of identifying financial strengths and weaknesses
of the firm by properly establishing relationship between the items of the balance sheet and the profit
BASIC STOCK VALUATION
Common stock valuation
Common stock provides an expected future cash flow stream, and a stock's value is found in the same
manner as the values of other financial assets: as the present value of the expected future cash flow
stream.
CHAPTER
Organizing Production
9
After studying this chapter you will be able to
Explain what a firm is and describe the economic
problems that all firms face
Distinguish between technological efficiency and
economic efficiency
Define and explain the princ
2-1
CHAPTER 2
Risk and Return: Part I
Basic return concepts
Basic risk concepts
Stand-alone risk
Portfolio (market) risk
Risk and return: CAPM/SML
2-2
What are investment returns?
Investment returns measure the
financial results of an investment.
R
RISK AND RETURN
INTRODUCTION
What is an investment?
Investment is current commitment of dollars for a period of time in order to derive future payment that
will compensate the investor for:
1. the time funds are committed
2. the expected rate of inflation