Valuation of Equity Securities
In class discussion:
This section trains the student to value a variety of equity securities. It assumes the student is experienced at time value of money calculations and basic algebra. The section presents information on the characteristics of equity instruments and trains students in the use of TVM based valuation equations for equity.
These valuation techniques can be used by investors for calculating the appropriate price or rate of return for those assets.
With slight modifications, the valuation techniques can be used by firms issuing these securities to calculate the annual costs associated with this type of firm financing. Once the costs of individual types of financing are known, the firms weighted average cost of capital can be calculated. This weighted average cost of capital will then be used in the capital budgeting decision process.
Text Readings and Assignments:
Fundamentals of Financial Management, by Eugene F. Brigham & Joel F. Houston, 11th. edition, (Thomsom - South-Western)
ISBN: 0324319800
Assigned Readings: Chapter 9 (pp. 289-317)
| Component | Chapter Sections: |
Pages |
Questions |
Self Test |
Problems |
| Topics | 9.1 - 9.10 | 289 - 317 | |||
| Assignments | 1,2,3,4,5 | 1,2,3,4 | 1,2,3,4,5,6,7,9,10,11,12,16,17,18,20 |
Solutions to assigned Questions and Problems are available in MS WORD format here.
Dr. Constand's Online Readings:
The links below will take you to summaries of the professors' notes and discussions on the topics.
Valuing Common Stock - Dividend Model
Topic Quiz (not available)
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or jump to another topic in this module:
Analyzing Financial Statements
Debt - Valuation and Rates of Return
Equity - Valuation and Rates of Return