STOCK AND BOND VALUATION Assignment Overview Before starting on this assignment, make sure to thoroughly review the required background materials. This assignment will require you to use the various discounted cash flow methods and dividend models to ma

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.]

 

 

Gitman, L. (2005). Chapter 7: Stock valuation. Principles of Managerial Finance. Pearson Education. Retrieved from  http://wps.aw.com/wps/media/objects/222/227412/ebook/ch07/chapter07.pdf  [If the link is down, click  Stock Valuation  or  Managerial Finance  for an alternative link.]

 

 

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

Gitman, L. (2005). Chapter 6: Interest rates and bond valuation. Principles of Managerial Finance. Pearson Education. Retrieved from  http://wps.aw.com/wps/media/objects/222/227412/ebook/ch06/chapter06.pdf  [If the link is down click  Interest Rates and Bond Valuation  or  Managerial Finance  for an alternative link. For a video PowerPoint version of this chapter, click  Interest Rates and Bond Valuation ]

Ross, S., Westerfield, R., & Jordan, B. (2007) Chapter 7: Equity markets and stock valuation. Essentials of Corporate Finance. McGraw Hill. Retrieved from  novellaqalive2.mhhe.com/sites/dl/free/007000000x/484691/Chap7_EquityMkts.pdf