CS&FP exam:
Week 1; Recap AP&CP:
Perpetuity = forever
No growth? V = C/r
Annuity = period
Bond Valuation:
Yield to maturity:
( couponrate∗face value )
CPN =
number of coupon payments per year
Stock valuation:
Constant-growth dividend discount model:
Pt = (Dt+1 + Pt+1) / (1+rE)
, Enterprise valuation:
Discounted free cash flow model :
EV = enterprise value = E+D
V = value = E + D – Ex. cash
EV = Vt + Excess cash
Vt = equity + debt – excess cash
Equity = Vt – debt + excess cash
Vt = FCFt+1 / (WACC – g)N
Vt = FCFt+1 / WACC
Current share price: P = EV/N
Capital asset pricing model BDH:
CAPM:
Beta = systematic risk.
E(Rm) – Rf = market risk premium
Weighted average cost of capital:
Weigh of equity = = wE = E/(E+D)
Weight of debt = wD = D/(D+E)
Week 1; Recap AP&CP:
Perpetuity = forever
No growth? V = C/r
Annuity = period
Bond Valuation:
Yield to maturity:
( couponrate∗face value )
CPN =
number of coupon payments per year
Stock valuation:
Constant-growth dividend discount model:
Pt = (Dt+1 + Pt+1) / (1+rE)
, Enterprise valuation:
Discounted free cash flow model :
EV = enterprise value = E+D
V = value = E + D – Ex. cash
EV = Vt + Excess cash
Vt = equity + debt – excess cash
Equity = Vt – debt + excess cash
Vt = FCFt+1 / (WACC – g)N
Vt = FCFt+1 / WACC
Current share price: P = EV/N
Capital asset pricing model BDH:
CAPM:
Beta = systematic risk.
E(Rm) – Rf = market risk premium
Weighted average cost of capital:
Weigh of equity = = wE = E/(E+D)
Weight of debt = wD = D/(D+E)
