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FNAN 307 E2
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Common Stock Valuation:
The formula to find the price is ______
Common Stock Valuation:
The formula to find the RRR is _____
fixed income securities
bonds
____ debt has no collarteral
Debenture
In long-term bonds:
Price tag = ____
Par Value = ____
Yield to Maturity = ____
Coupon Rate = ____
Years to Maturity = _____
-PV
FV
I/Yr
PMT (decimal must be multiplied by par)
N
To find the current yield on bonds ______
What is working capital?
current assets - current liabilities
On callable bonds, interest rates are ____ than current interest rates.
higher
The elements of callable bonds:
Years to Call = ____
Yield to Call = ____
Price Tag = ____
Coupon Rate = ___
Call Price = ____
N
I/Yr
PV
PMT (coupon rate * par)
FV (par + call premium)
Beta Calculation:
What is the holding period return?
(Resale Price - Purchase Price) + Price total, dividends received, income received, cash receipts / purchase price
What is the capital asset pricing model?
RRR = Risk Free Rate (Rf) + [Beta(Return in Market - Risk free rate)]
____ is the benchmark for Beta
1
How to find beta:
2nd 8
2nd 7 and enter the x's and y's
2nd 8 ↓ look for b
What are the three main ways to value stock?
zero growth (preferred)
constant growth (common stock)
variable growth (only measures the price tag)
In stock valuation:
How do you find the dividend yield?
dividen yield = dividend (DPS)/price
What % interest is a controlling interest in stockholder's rights?
5%
For zero growth:
how do you find return?
how do you find the price?
return = div/price
price= div/return
For constant growth:
how do you find return?
how do you find price?
return = next div/price + growth rate
price = next div/RRR - growth
For variable growth:
How do you find the price?
Price = next div/RRR - growth
For Free Cash Flow:
What is the return on stock?
what is the expected dividend?
return on stock = (next yrs div/price of stock) + growth
expected div = Last div paid * (1 + growth rate of divs)
In FCF what is the price of the company?
price = next yrs anticipated FCF/ RRR - G
How do you find FCF?
NOPAT (+depreciation/amortization)(-Inv in capital)
What kind of FCF do we work with?
Levered (management efficiency)
How do you find NOPAT?
EBIT * (1.0 - Tax Rate)
What are paybacks?
how fast recover initial investment
What does the Internal Rate of Return tell you when determining best project?
% it takes to get to 0 NPV
When determining best project, if the NPV > 0 the project is ____
acceptable
Author
jessenliz2010
ID
311066
Card Set
FNAN 307 E2
Description
exam 2
Updated
2015-11-07T20:11:00Z
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