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Valuation Techniques: Discounted Cash Flow, Earnings Quality, Measures of Value Added, and Real Options

توضیحات

Praise for Valuation Techniques

"This compilation includes the classics of valuation from leading theoreticians and practitioners. It covers the evolving thought processes of several decades and brings into focus the questions faced and answered by different generations of investors. The readings, which were written by notables ranging from Benjamin Graham to some of today's thought leaders, can help prepare current investors for future challenges and opportunities."
—Abby Joseph Cohen, CFA Goldman Sachs former chair, CFA Institute

"This anthology of papers on cash flow, dividend, and options-based valuation techniques is a useful reference tool, both as a historical perspective and for sourcing state-of-the-art practice. Academicians and practitioners alike will find the research articles, case studies, and examples thought-provoking and highly valuable."
—Scott D. Stewart, PhD, CFA, Member of the Board of Directors Boston Security Analysts Society


DAVID T. LARRABEE, CFA, is director of member and corporate products at CFA Institute, where he also serves as a content director in the areas of portfolio management and equity investments. Prior to joining CFA Institute, Mr. Larrabee spent two decades in the asset management industry as a portfolio manager and analyst. He earned a BA in economics from Colgate University and an MBA in finance from Fordham University.

JASON A. VOSS, CFA, is a content director at CFA Institute, where he focuses on fixed income, behavioral finance, and corporate finance. He is the author of The Intuitive Investor, and he also authored the What My Intuition Tells Me Now investment blog. Previously, he was a portfolio manager at Davis Selected Advisers, L.P., where he built an impressive track record co-managing the Davis Appreciation and Income Fund. Mr. Voss earned a BA in economics and an MBA in finance and accounting from the University of Colorado.

Foreword ix

Introduction 1

PART I: VALUATION PERSPECTIVES: THEN AND NOW 3

CHAPTER 1 Two Illustrative Approaches to Formula Valuations of Common Stocks 5
Benjamin Graham

Reprinted from the Financial Analysts Journal (November 1957):1115.

CHAPTER 2 Seeking a Margin of Safety and Valuation 17
Matthew B. McLennan, CFA

Reprinted from CFA Institute Conference Proceedings Quarterly (June 2011): 2734.

PART II: VALUATION METHODOLOGIES 29

CHAPTER 3 Company Performance and Measures of Value Added 31
Pamela P. Peterson, CFA, and David R. Peterson

Reprinted from the Research Foundation of CFA Institute (December 1996).

CHAPTER 4 The Affordable Dividend Approach to Equity Valuation 93
Alfred Rappaport

Reprinted from the Financial Analysts Journal (July/August 1986):5258.

CHAPTER 5 Discounted-Cash-Flow Approach to Valuation 105
Gregory A. Gilbert, CFA

Reprinted from ICFA Continuing Education Series (1990):2330.

CHAPTER 6 Equity Securities Analysis Case Study: Merck & Company 115
Randall S. Billingsley, CFA

Reprinted from AIMR Conference Proceedings: Equity Securities Analysis and Evaluation (December 1993):6395.

CHAPTER 7 Traditional Equity Valuation Methods 155
Thomas A. Martin, Jr., CFA

Reprinted from AIMR Conference Proceedings (May 1998):2135.

CHAPTER 8 A Simple Valuation Model and Growth Expectations 177
Morris G. Danielson

Reprinted from the Financial Analysts Journal (May/June 1998):5057.

CHAPTER 9 Franchise Valuation under Q-Type Competition 189
Martin L. Leibowitz

Reprinted from the Financial Analysts Journal (November/December 1998): 6274.

CHAPTER 10 Value Enhancement and Cash-Driven Valuation Models 209
Aswath Damodaran

Reprinted from AIMR Conference Proceedings: Practical Issues in Equity Analysis (February 2000):417.

CHAPTER 11 FEVA: A Financial and Economic Approach to Valuation 229
Xavier Adsera` and Pere Vin˜olas

Reprinted from the Financial Analysts Journal (March/April 2003):8087.

CHAPTER 12 Choosing the Right Valuation Approach 243
Charles M.C. Lee

Reprinted from AIMR Conference Proceedings: Equity Valuation in a Global Context (April 2003):414.

CHAPTER 13 Choosing the Right Valuation Approach 259
Robert Parrino, CFA

Reprinted from CFA Institute Conference Proceedings: Analyzing, Researching, and Valuing Equity Investments (June 2005):1528.

CHAPTER 14 Valuing Illiquid Common Stock 279
Edward A. Dyl and George J. Jiang

Reprinted from the Financial Analysts Journal (July/August 2008):4047.

PART III: EARNINGS AND CASH FLOW ANALYSIS 291

CHAPTER 15 Earnings: Measurement, Disclosure, and the Impact on Equity Valuation 293
D. Eric Hirst and Patrick E. Hopkins

Reprinted from the Research Foundation of CFA Institute (August 2000).

CHAPTER 16 Cash Flow Analysis and Equity Valuation 349
James A. Ohlson

Reprinted from AIMR Conference Proceedings: Equity Research and Valuation Techniques (May 1998):3643.

CHAPTER 17 Accounting Valuation: Is Earnings Quality an Issue? 361
Bradford Cornell and Wayne R. Landsman

Reprinted from the Financial Analysts Journal (November/December 2003): 2028.

CHAPTER 18 Earnings Quality Analysis and Equity Valuation 375
Richard G. Sloan

Reprinted from CFA Institute Conference Proceedings Quarterly (September 2006): 5260.

CHAPTER 19 Is Cash Flow King in Valuations? 389
Jing Liu, Doron Nissim, and Jacob Thomas

Reprinted from the Financial Analysts Journal (March/April 2007):5668.

PART IV: OPTION VALUATION 407

CHAPTER 20 Employee Stock Options and Equity Valuation 409
Mark Lang

Reprinted from the Research Foundation of CFA Institute (July 2004).

CHAPTER 21 Employee Stock Option Valuation with an Early Exercise Boundary 465
Neil Brisley and Chris K. Anderson

Reprinted from the Financial Analysts Journal (September/October 2008): 88100.

PART V: REAL OPTIONS VALUATION 483

CHAPTER 22 Real Options and Investment Valuation 485
Don M. Chance, CFA, and Pamela P. Peterson, CFA

Reprinted from the Research Foundation of CFA Institute (July 2002).

CHAPTER 23 Real-Options Valuation for a Biotechnology Company 573
David Kellogg and John M. Charnes

Reprinted from the Financial Analysts Journal (May/June 2000):7684.

About the Contributors 587

Index 589