Chapter 14
Efficient markets—general principles of security valuation

Efficient markets principle 1: Competitive markets have a
single price for a single
good
Efficient markets principle 2: Bundles
are priced additively
Additivity is not always instantaneous:
The case of Palm and 3Com
Efficient markets principle 3: Cheap
information is worthless
Efficient markets principle 4:
Transaction costs are important

PPT
for Chapter 14

Chapter 15
Bond valuation

Computing the yield to maturity (YTM)
of a bond
U.S. Treasury bills
U.S. Treasury bonds and notes
A corporate bond example: Giant
Industries
Callable bonds
Preferred stock
Deriving the yield curve from zerocoupon bonds
Excel functions: IRR, XIRR, Rate, Yield

PPT
for Chapter 15

Chapter 16
Valuing stocks

Valuation method 1: The current price of a stock is the
correct price (efficient
markets approach)
Valuation method 2: The price of a
share is the discounted
value of the future
anticipated free cash flows
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
Valuation method 4: Comparative
valuation—using
multiples to value shares
Computing Target’s WACC, the SML approach
Computing Target’s cost of equity with the Gordon model
NOTE: I’ve posted
some other PPTs relating to valuation with multiples, an overview of
valuation, EVA, and brand valuation.
Use as you like but remember to give credit!

PPT
for Chapter 16
Multiples
PPT
Valuation
overview
Brand
valuation
EVA
valuation
Making intelligent revenue projections
