- A
- A final warning
- A final word What caused the riskiness of the Treasury bills
- A fully workedout exampleHilton Hotels
- Note on Terminology
- A safe security can be risky because it has a long horizon
- A short finance note
- A simple example of an option
- A simple example of the option to learn
- A statistical note
- A statistical note skip this if statistics scares you
- A2 Computing the FCF growth rate for Procter Gamble
- A3 Using the industry asset beta J3asset to compute the WACC for Procter Gamble
- Academic evidence
- Accelerated depreciation - 2
- Additivity example 1 The term structure prices bonds
- Advanced section portfolio statistics for multiple assets
- Advanced topic Using continuouslycompounded returns to compute annualized return statistics
- Ahold Stock Price
- Alternative calculations of the growth rate
- An arbitrage proof of putcall parity can be skipped on first reading
- An initial example
- Analyzing The Profit From A Call Option - 2
- Anwc
- Deriving the formula for the minimum variance portfolio
- Portfolios with three and more assets
- Appendix Algebraic Present Value Formulas
- April June
- Betas add up
- Book value versus terminal value
- Building the data table6
- C0 C1 C2 C3 100 60 50
- Calculating the crossover point
- Calculating the implied volatility from option prices
- Calculating the WACC for Courier
- Capital budgeting and salvage values
- Capital budgeting principle Dont forget the effects of taxesSally and Daves condo investment
- Capital budgeting principle Ignore sunk costs and consider only marginal cash flows
- Capital structure when there are corporate taxesABC Corp
- Case 2 The case of the fair coin splitting your investment between the assets
- Case 3 The case of the counterfeit coin a correlation of1
- Case 4 The case of the counterfeit coincorrelation of
- The time value of money
- Introduction To Options
- Chapter contents - 2 3 4 5 6 7 8 9 10
- Comparing actual market prices to Black Scholes prices - 2
- Comparing the SML and the Gordon model for calculating the WACC
- Computing annual flat payments on a loanExcels PMT function
- Computing Targets cost of equity rE with the Gordon model - 2
- Computing Targets WACC the SML approach - 2
- Computing the free cash flow FCF
- Computing the market portfolio M the Sharpe ratio
- Computing the mean and standard deviation of the McDonalds returns
- Conclusion - 2
- Conclusion and summary 3 4
- Conclusion Procter Gamblewhat happened
- Consolidated Statements Of Income
- Copying the formula
- Correcting errorsediting the cell
- Correlation doesnt
- Cp
- Current version July 18 2004 Chapter contents
- Current version September 22 2002 Chapter contents
- D
- Longteem Debt
- Definition Arbitrage Strategy
- Deposits At Beginning Of Year
- Deposits At End Of Year
- Dividends satisfaction now versus capital gains enjoy later
- Do NPV and IRR produce the same project rankings
- Doing the same thing with Solver
- Dont read this section
- Downloaded data from commercial sources is adjusted for dividends and splits
- Economics focus Taking the measure - 2
- Efficient Markets Principle 2 Bundles are priced additively
- Efficient Markets Principle 3 Cheap information is worthless
- ErM using current market data
- European versus American options
- Example 1 The SML works for a portfolio composed only of stock A
- Excel And Statistical Review
- Excel Finance Note
- Exercises - 2 3 4 5 6
- Exercises unfinished 7 8
- Exercises28
- Fact 1 Call price of an option Max [ S0 PV X
- Fact 1 Call price of an option Max[S0 Present ValueX0
- Fact 2 Its never worthwhile to exercise a call early2
- Fact 2 Its never worthwhile to exercise a call early3
- Fact 3 Putcall parity Put0 Call0 PV X S0 - 2
- Fact 6 You might find it optimal to earlyexercise an American put on a nondividend paying stock - 2
- Fact 7 Option prices are convex somewhat advanced
- Fcf - 2
- February 2003
- Figure
- Finance concepts discussed in this chapter
- Four assets
- Future value
- General properties of option prices
- Generalizing
- GM Put Options Expiring 21jan05
- Graphing portfolio returns
- H
- Hi
- Hit
- Horizon
- How long will it take to pay off a loan
- I
- I I I I I
- Implied volatility Calculating a from option prices
- Info - 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 277 278 279 280 281
- Installing Solver
- Intermediate summary - 2
- Introduction - 2 3 4 5
- Irr - 2 3 4 5 6 7 8
- Ln
- March 2003
- Measuring a firms asset Passes and WACC an example
- Minimum variance portfolios using calculus
- MIR Returns vs SP500 Returns
- More changes
- Msft
- N
- Nav
- Net present value
- Npv
- Npv A Cf0A CF0B ZCFr NPV B
- Ok - 2 3
- One further notemidyear discounting
- One more change - 2
- Optimal portfolios
- Option websites
- Overview - 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
- P0
- Pmt
- Pointing and using the F4 key
- Portfolio mean and variance for a twoasset portfolio
- Portfolios with more than 3 assets
- Preparing a profit and loss statement for January June
- Present value
- Profit And Losshow much money did the firm make
- Property 1 Options with more time to maturity are worth more
- Property 2 Calls with higher exercise prices are worth less puts with higher exercise prices are worth more
- Pv
- R
- Real options advanced topic
- Reason 1 The put option allows you to delay the decision to sell the stock
- Reason 2 A call option allows you to make a bet on the stock price going up This bet is a low cost b high upside potential and c onesided
- Reconciling the cash balancesthe consolidated statement of cash flows
- Regular Campaign
- Return versus Standard Deviation of Returns
- Risk in stock pricesMcDonalds stock
- Risky portfolios and the riskless asset
- RpThe Motley Fool
- S126b 4665h 4562h
- Safety
- Salvage valuea variation on the theme
- Saving for the futurebuying a car for Mario
- Saving for the futuremore realistic problems
- Schematic DCF Valuation of the Firm
- Second example
- Semistrong form efficiency sometimes true
- Share Repurchases Substitute for Dividends
- Shortselling a stock
- Si 26b 4665h 4562h
- Si 37 So 47 56194 So
- Sidebar Functions and Dialog Boxes
- Sidebar What is depreciation
- Slight bug fix July 12 2003 Chapter contents
- Slight bug fix September 7 2003 Chapter contents
- Solver remembers Goal Seek forgets
- Some important terminology before we start
- Some more sophisticated efficient markets methods - 2
- Standard Deviation
- Starting a firm
- Statistical functions
- Statistical Note skip until later or perhaps forever if you like
- Step 1 Estimate the weighted average cost of capital
- Step 2 Project a reasonable number of FCFs
- Step 3 Project the longterm FCF growth rate and the terminal value
- Step 5 Value the firms equity by subtracting the value of the firms debt today from the firm value
- Step 6 Adding midyear valuation
- Stop and think
- Summary - 2 3 4 5
- Summing up - 2
- Summing up additivity 3 4 5 6
- Summing up the SML first then well explain
- Sum Product
- T - 2 3 4 5 6
- T T 7
- Tax shields
- Taxes
- Technical comment midyear discounting
- Technical trading rulesanother violation of weakform efficiency
- Terminal value
- The advantage of diversificationa simple example
- The balance sheet
- The Black Scholes Model - 2
- The consolidated statement of cash flows
- The discounted cash flow DCF valuation Valuing Motherboard by discounting its future free cash flows
- The distribution of McDonalds stock returns
- The effect of correlation on the efficient frontier
- The efficient frontier and the minimum variance portfolio
- The expected return on the market ErM
- The Gordon dividend model discounting anticipated dividends to derive the firms cost of equity rE
- The internal rate of return IRR
- The next half year
- The NPV rule for judging investments and projects
- The security market line and fl
- The valuation process
- This version 15 August 2003 Chapter contents
- This version December 2002 Chapter contents
- This version February 13 2004 Chapter contents
- This version February 6 2004 Chapter contents
- This version July 27 2003 Chapter contents
- This version March 2003 Chapter contents
- This version May 18 2003 Chapter contents
- This version November 20 2004 Chapter contents - 2
- This version October 17 2003 Chapter contents
- This version September 22 2002 Chapter contents
- Two uses of the WACC
- Two ways to calculate the cash flow
- Understanding the modeldoing some sensitivity analysis
- Using a function
- Using Excels Solver
- Using FCFs and WACC to value Courier
- Using multiples to value firmssummary
- Using the FCF in a valuation exercise
- Using the Gordon dividend model to calculate the cost of equity rE
- Using the SML to calculate the cost of capitalcalculating the parameter values
- Using the WACC as a discount rate for projects
- V
- Valuation 2 Example 1a basic example - 2
- Valuation method 1 The current market price of a stock is the correct price the efficient markets approach - 2
- Valuation method 2 Example 2two FCF growth rates
- Valuation method 2 Example 3using the terminal value in a realestate project
- Valuation method 2 Example 4using the terminal value to get around large FCF growth rates
- Valuation method 2 The price of a share is the discounted value of the future anticipated free cash flows - 2
- Valuation method 3 The price of a share is the present value of its future anticipated equity cash flows discounted at the cost of equity - 2
- Valuation method 4 comparative valuation Using multiples to value shares
- Valuing ABC Corptaking account of leverage and corporate taxes
- Valuing Courier Corporation using its WACC and predicted free cash flows FCFs
- W
- Wacc - 2
- Weakform efficiency almost always true
- What do the Black Scholes parameters mean How to calculate them - 2
- What does pricing an option mean
- What does the firms WACC mean
- What exante rate of return would you have earned if youd bought the Tbill during the year
- What expost rate of return would you have earned if youd sold the Treasury bill early
- What now
- Whats more usefulthe consolidated statement of cash flows or the free cash flow
- Whats the message
- Whats the point
- Whats wrong - 2
- When Only Corporate Income Is Taxed
- Where is this chapter going
- Which depreciation do you add back in the cash flow
- Why buy a call option - 2
- Why buy a put option
- Why do call prices have to be convex
- Why do finance professionals shun direct equity valuation
- Why is the debt Pd so high
- Lu
- X
- Xyz Corparthur And Moms Income
- You can hide the cell header but not erase it