Exam (elaborations)
Corporate Valuation and Stock Price Valuation questions and answers graded A+ 2024/2025
- Course
- Institution
Corporate Valuation and Stock Price Valuation questions and answers graded A+ 2024/2025
[Show more]
Seller
Follow
Content preview
CorporateValuation
and
Stock
Price
Valuation
What
is
the
difference
between
value
of
operations
and
value
of
stock?
VoP
is
measured
with
FCF
and
WACC:
=
FCF1/(1+WACC)^W+FCF2/(1+WACC)^2)
Value
of
a
stock
is
dividend
and
rate
of
return
=
D1/(1+rs)^1
+
D2/(1+rs)^2
+
D3/(1+rs)^3
What
is
the
hierarchy
of
common
stock?
What
should
be
the
goal
of
management?
Common
stock
represents
ownership.
Ownership
implies
control.
Stockholders
have
ownership
Stockholers
elect
directors.
Directors
hire
management.
Since
managers
are
"agents"
of
shareholders,
their
goal
should
be:
Maximize
stock
price.
Previous
Play
Next
Rewind
10
seconds
Move
forward
10
seconds
Unmute
0:00
/
0:15
Full
screen
Brainpower
Read
More
What
are
the
3
ways
to
value
stock?
Free
cash
flow
model -
Constant
growth
-
Nonconstant
growth
Dividend
growth
model
-
Constant
growth
-
Nonconstant
growth
Using
the
multiples
of
comparable
firms
What
is
FCF?
Free
cash
flow
(FCF)
is:
-
The
cash
flow
available
for
distribution
to
all
of
a
company's
investors.
-
Generated
by
a
company's
operations
What
is
WACC?
The
weighted
average
cost
of
capital
(WACC)
is:
-
The
overall
rate
of
return
required
by
all
of
the
company's
investors.
What
is
the
value
of
operations?
The
PV
of
expected
future
FCF
(generated
by
a
company's
operation),
discounted
at
the
WACC,
is
the
value
of
a
company's
operations
(Vop):
What
is
the
formula
for
value
of
operations
What
are
the
two
conditions
in
which
you
can
calculate
the
value
of
operations?
1.
The
free
cash
flows
are
constant
in
each
period.
2.
The
free
cash
flows
eventually
grow
at
a
constant
rate.
Virtually
most
companies
fall
into
this
situation.
What
are
the
two
sources/claims
of
value?
Value
of
operations
-
Primary
source
of
value
comes
from
value
of
operations.
Nonoperating
assets
(also
called
"financial
assets")
-
Short-term
investments
and
other
marketable
securities
(T-bill)
-
Ownership
of
non-controlling
interest
in
another
company
(other
businesses)
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Legitexams. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $9.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
70840 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now