Tiêu đề Equity Valuation.pdf ✅

Last Revised: 08/24/2023 1 2024 Level 2 - Equity Valuation This document should be used in conjunction with the corresponding learning modules in the 2024 Level 2 CFA® Program curriculum. Some of the graphs, charts, tables, examples, and figures are copyright 2023, CFA Institute. Reproduced and republished with permission from CFA Institute. All rights reserved. Required disclaimer: CFA Institute does not endorse, promote, or warrant accuracy or quality of the products or services offered by MarkMeldrum.com. CFA Institute, CFA®, and Chartered Financial Analyst® are trademarks owned by CFA Institute. © 2533695 Ontario Limited d/b/a MarkMeldrum.com. All rights reserved. Learning Modules Page Equity Valuation: Applications and Processes 2 Discounted Dividend Valuation 10 Free Cash Flow Valuation 32 Market-Based Valuation: Price and Enterprise Value Multiples 51 Residual Income Valuation 78 Private Company Valuation 92 Review 107 M.M134813896.
Last Revised: 08/24/2023 2 Equity Valuation: Applications and Processes a. define valuation and intrinsic value and explain sources of perceived mispricing b. explain the going concern assumption and contrast a going concern value to a liquidation value c. describe definitions of value and justify which definition of value is most relevant to public company valuation d. describe applications of equity valuation e. describe questions that should be addressed in conducting an industry and competitive analysis f. contrast absolute and relative valuation models and describe examples of each type of model g. describe sum-of-the-parts valuation and conglomerate discounts h. explain broad criteria for choosing an appropriate approach for valuing a given company M.M134813896.
Last Revised: 08/24/2023 3 Valuation & Intrinsic Value · The goal of valuation is to identify mispriced securities/assets liquidation ⇒ Price vs. Value ⇒ Intrinsic Value (unobservable) - value of an asset given a hypothetically complete understanding of the asset’s investment characteristics · undertaking valuation efforts assumes ➀ mispricing exists (P ≠ V) - at odds with market efficiency ⇒ Grossman-Stiglitz paradox – if markets were informationally efficient, no rational person would incur costs of valuation - how would prices reflect value? Thus/ - investors will not rationally incur the costs of analysis unless expectations of reward to effort exists (abnormal return, excess risk-adjusted return) (�) Var1 Var2 Varn future similar investment assets returns estimate compare estimate asset value market price (observable) Page 1 LOS a - define - explain Page 2 LOS a - define - explain M.M134813896.
Last Revised: 08/24/2023 4 · undertaking valuation efforts assumes ➁ P&V will converge �� − � = (� − �) + (�� − �) estimated value ⇒ convergence should be expected within some Investment Horizon - requires a catalyst ⇒ what will cause convergence (i.e. next 2-3 earnings reports) Going Concern/ Liquidation ⇒ going concern value · a company will continue business activities - some assets only have value if the ‘going-concern’ assumption is valid ⇒ liquidation value ➞ immediate vs ➞ orderly liquidation value · Focus of valuation readings ➞ intrinsic value estimated under a going concern assumption Value · Intrinsic Value - typically, the relevant concept of value for valuing public equities · Fair market value - value at which an asset/liability would change hands between a willing buyer/seller when they are not under any compulsion to buy/sell - both are informed to all material aspects · Investment value - an asset may be worth more to a particular buyer (e.g. synergies) market price true mispricing (�) error · forecast · model V- intrinsic value (unobservable) ⇒ key element · differ from consensus · correct companies in financial distress Page 3 LOS a - define - explain Page 4 LOS b - explain - contrast Page 5 LOS c - describe - justify M.M134813896.