CONCEPTS OF VALUATION LU B.COM 5th Semester

Syllabus

P29Y: Concepts of Valuation

Unit-I

Cost Price, Selling Price and Profit Margin, Simple and Compound Interest. Future Value and Present Value. Bill Discounting and Average Due Date.

Unit-II

Annuity: Ordinary Annuity, Annuity Due, Future Value of Annuity Calculation, Determining Present Value and Future Value of Annuity Stream of Payments, Compounding Frequency, the Present Value of Perpetuities, Determining the Present Value of Uneven Cash Flow Streams, Determining the Present Value of Deferred Annuities, Net Present Value.

Unit-III

The Characteristics of Fixed-Income (Debt and Preferred Stock) Securities Including a. Types of Each form of Security b. Features c. Users d. Advantages and Disadvantages, Reading and Interpreting Financial Market Data, Including Stock and Bond Price Quotations, Capitalization of Cash Flows from the Asset, as Well as the Risk-Free Rate. The Value of a Bond with a Finite Maturity Date, the Yield to Maturity of a Bond, the Value of a Perpetual Bond, or Perpetuity, Preferred Stocks.

Unit-IV

The Characteristics of Variable Income (Common Stock) Securities – Stockholder Rights, Features, Advantages and Disadvantages, Methods of Selling Securities in the Primary Capital Markets – Public, Cash Offering, Direct Placement, Rights Offering to Shareholders, The General Dividend Valuation Model, Constant Growth Dividend Valuation Model, Zero Growth Dividend Valuation, Non-Constant Growth Dividend Valuation Model.