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Level 81

Equity & Fixed Income

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Equity Valuation Models
PV models, Multiplier models, and Asset-based models used for estimate of intrinsic value
Present Value Models
Estimate intrinsic value as the present value of expected future benefits
Multiplier Models
Estimate intrinsic value based on a multiple of some fundamental variable
Asset-based Valuation
Estimate intrinsic value based on the estimated value of assets and liabilities
Dividend Discount Model
V(0) = sum of D(t)/(1+r)^t {assuming going concern -- perpetuality -- constant required rate of return}
Free-Cash-Flow-to-Equity (FCFE) Valuation
FCFE is a measure of dividend-paying capacity, and can be used for stocks no paying dividends
Preferred Stock Valuation
V(0) = D(0)/r {for perpetual}
Gordon Growth Model
V(0) = [D(0)x(1+g)]/(r-g), where g = b x ROE
Multistage Dividend Discount Models
V(0) = sum of [D(0)x(1+gs)^t]/(1+r)^t + V(n)/(1+r)^n
P(0)/E(1) =
P/E Multiplier Model