Stock valuation
- Three methods to obtain the price per share:
- Constant growth dividend discount model (CGM): P0 = D1/(Rs-g)
- Discounted free cash flow model (DCF): V0 = FCF1/(WACC-g) plus several other steps to arrive at P0
- Market multiple analysis: Pibm = Eibm * (P/E industry); Vibm = EBITDAibm * (V/EBITDA industry)
- Preferred stock: a perpetuity Pps = Dps / Rps
Risk and return
- Sum vs. product notation
- Differences between historical return (geometric mean), expected return, required return
- Read the risk & return presentation
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