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Valuation of Bonds and Shares
Valuation of Bonds ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Valuation of Bonds Contd… ,[object Object],[object Object],[object Object],[object Object]
Valuation of Bonds Contd… ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Valuation of Bonds Contd… ,[object Object],[object Object],[object Object]
Valuation of Bonds Contd… ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Valuation of Bonds Contd… ,[object Object],[object Object],[object Object]
Valuation  of Bonds Contd… ,[object Object],[object Object],[object Object],[object Object],[object Object]
Valuation of Preference Share ,[object Object],[object Object],[object Object],[object Object]
Valuation of Equity ,[object Object],[object Object],[object Object]
Dividend Discount Models A procedure for valuing the price of a stock by using predicted dividends and discounting them back to present value. The idea is that if the value obtained from the DDM is higher than what the shares are currently trading at, then the stock is undervalued. V 0  = Value of Stock D t  = Dividend k = required return
No  Growth Model ,[object Object],[object Object],[object Object],V D k o 
Constant  Growth Model ,[object Object],[object Object],[object Object],[object Object]
Estimating Dividend Growth Rates ,[object Object],[object Object],[object Object],[object Object],g ROE b  
Multi-Period  Dividend-Discount Model P N  = expected sales price of  stock at time N N = number of years the stock is to be held
Multi-Period Earnings-Discount Model P N  = expected sales price of  stock at time N N = number of years the stock is to be held
P/E Ratio and Growth Opportunities ,[object Object],[object Object],P D k g E b k b ROE P E b k b ROE 0 1 1 0 1 1 1           ( ) ( ) ( )
THANK YOU ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],END

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Valuation of Bonds and Shares

  • 1. Valuation of Bonds and Shares
  • 2.
  • 3.
  • 4.
  • 5.
  • 6.
  • 7.
  • 8.
  • 9.
  • 10.
  • 11. Dividend Discount Models A procedure for valuing the price of a stock by using predicted dividends and discounting them back to present value. The idea is that if the value obtained from the DDM is higher than what the shares are currently trading at, then the stock is undervalued. V 0 = Value of Stock D t = Dividend k = required return
  • 12.
  • 13.
  • 14.
  • 15. Multi-Period Dividend-Discount Model P N = expected sales price of stock at time N N = number of years the stock is to be held
  • 16. Multi-Period Earnings-Discount Model P N = expected sales price of stock at time N N = number of years the stock is to be held
  • 17.
  • 18.