STOCK AND BOND VALUATION - Case 2

Module 2 - Background

STOCK AND BOND VALUATION

Required Reading

Start off with these two tutorials that will give you an overview of the basic methods of valuing stocks and bonds from Subjectmoney:

Subjectmoney. (2013, January 2). How to price/value bonds - formula, annual, semi-annual, market value, accrued interest [Video file]. Retrieved from  https://www.youtube.com/watch?v=7zCqoED8MVk

 

Subjectmoney. (2013, January 3). Dividend discount model (DDM) - constant growth dividend discount model - how to value stocks [Video file]. Retrieved from  https://www.youtube.com/watch?v=n76Pz3HOBPo

Now dig much deeper into bond and stock valuation with the following books chapters. They cover not only the computational methods but also provide a general overview of stock and bond markets:

 

Ross, S., Westerfield, R., & Jordan, B. (2007). Chapter 6: Interest rates and bond valuation. Essentials of Corporate Finance. McGraw Hill. Retrieved from  http://novellaqalive2.mhhe.com/sites/dl/free/007000000x/484691/Part4_Chap6.pdf  [If this link is down, click  Interest Rates and Bond Valuation  for an alternative link.]

 

 

 

Fabozzi, F. J., & Peterson Drake, P. (2009). Chapter 7: Asset valuation: Basic bond and stock valuation models. Finance: Capital markets, financial management, and investment management. Wiley. Available in the Trident Online Library.

 

Finally, for some examples of valuation calculations in Excel see the following videos:

Moy, M. (2014). Bond valuation in Excel. Retrieved from  https://www.youtube.com/watch?v=H-_NP0UxX_U

Girvin, M. (2010). Stock valuation with dividend growth model. ExcellsFun. Retrieved from   https://www.youtube.com/watch?v=cbRIhwkGAnQ

Girvin, M. (2010). Stock value based on present value of future dividend cash flows. ExcellsFun. Retrieved from  https://www.youtube.com/watch?v=G2VIY5E3I3s&t=163s

Optional Reading

Davis, A. (2016). Bond pricing. Retrieved from  https://www.youtube.com/watch?v=-DnARyndirI

Ahmad, A. (n.d.). Bonds part II: Pricing. Coursera. Retrieved from  https://www.coursera.org/learn/finance-markets/lecture/EpByC/bonds-part-ii-pricing

Ozoguz, A. (n.d.) Basics of equity valuation. Coursera. Retrieved from  https://www.coursera.org/learn/global-financial-markets-instruments/lecture/vHPRN/basics-of-equity-valuation

Vishwanath, S. (2007). Chapter 24: Debt markets. Corporate finance: Theory and practice. SAGE Publications India.

Module 2

Required Material

Workman, T. (2013). How to price/value bonds. Subjectmoney. Retrieved from:  https://www.youtube.com/watch?v=7zCqoED8MVk

Workman, T. (2013). How to value stocks. Subjectmoney. Retrieved from:  https://www.youtube.com/watch?v=n76Pz3HOBPo

Ross, S., Westerfield, R., & Jordan, B. (2007) Chapter 6: Interest rates and bond valuation. Essentials of Corporate Finance. McGraw Hill. Retrieved from:  http://novellaqalive2.mhhe.com/sites/dl/free/007000000x/484691/Part4_Chap6.pdf   [If this link is down, click  Interest Rates and Bond Valuation  for an alternative link]

Fabozzi, F. J., & Peterson Drake, P. (2009). Chapter 7: Asset valuation: Basic bond and stock valuation models. Finance: Capital markets, financial management, and investment management. Wiley. Available in the Trident Online Library.

Moy, M. (2014). Bond valuation in Excel. Retrieved from:  https://www.youtube.com/watch?v=H-_NP0UxX_U

Girvin, M. (2010). Stock valuation with dividend growth model. ExcellsFun. Retrieved from:  https://www.youtube.com/watch?v=cbRIhwkGAnQ

Girvin, M. (2010). Stock value based on present value of future dividend cash flows. ExcellsFun. Retrieved from:  https://www.youtube.com/watch?v=G2VIY5E3I3s&t=163s

Optional Material

Davis, A. (2016). Bond pricing. Retrieved from:  https://www.youtube.com/watch?v=-DnARyndirI

Ahmad, A. (n.d.). Bonds part II: Pricing. Coursera. Retrieved from:  https://www.coursera.org/learn/finance-markets/lecture/EpByC/bonds-part-ii-pricing

Ozoguz, A. (n.d.) Basics of equity valuation. Coursera. Retrieved from:  https://www.coursera.org/learn/global-financial-markets-instruments/lecture/vHPRN/basics-of-equity-valuation

Vishwanath, S. (2007). Chapter 24: Debt markets. Corporate finance: Theory and practice. SAGE Publications India. 

Module 2 - Outcomes

STOCK AND BOND VALUATION

· Module

· Apply discounted cash flow models to value stocks and bonds.

· Evaluate the investment potential of a given company.

· Case

· Identify and explain the distinction between stocks and bonds.

· Apply discounted cash flow models to value stocks.

· Apply discounted cash flow models to value bonds.

· SLP

· Apply P/E ratios to assess and value stock investments.

· Apply the concept of liquidation value for stock investments.

· Evaluate the investment potential of a given company.

· Discussion

· Evaluate the investment potential of a given company.