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Preface | |
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What Is Security Analysis? | |
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Recent Trends | |
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Why Study Security Analysis? | |
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Overview of the Contents | |
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What's New in the Second Edition | |
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The Investing Environment | |
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Why Analyze a Security? | |
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The Origins of Security Analysis | |
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No Profit Guarantee | |
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Day-to-Day Trading and Security Analysis | |
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Herd Psychology and Security Analysis | |
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Momentum Investors | |
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Game Theory and Security Analysis | |
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The Premise of Security Analysis | |
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Scientific Method | |
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Security Analysis Techniques | |
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Basic Valuation Approaches | |
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Other Valuation Approaches | |
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Summary | |
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Questions and Short Problems | |
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Adopt-a-Company Exercises | |
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Who's Practicing Security Analysis? | |
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Securities Firms and Their Analysts | |
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Major Institutional Investors | |
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A Dying Art? | |
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Index Funds and Exchange Traded Funds | |
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Small Money Management Firms | |
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Rating Agencies | |
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Individual Investors: A Special Category | |
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Summary | |
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Questions and Short Problems | |
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Adopt-a-Company Exercises | |
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Seeking a Level Playing Field | |
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Brief History of Securities Regulation | |
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The Chief Regulator-The Securities and Exchange Commission | |
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Sales and Trading Practices | |
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Margin Regulation | |
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The Life Cycle of a New Security Issue | |
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Summary | |
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Questions and Short Problems | |
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Adopt-a-Company Exercises | |
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Other Sources of Information | |
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The Business Media | |
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The Free Internet | |
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The Fee for Service Internet | |
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Trade Associations, Consulting Firms, Government Publications and Financial Organizations | |
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Credit Rating Agencies | |
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Securities Firm Research | |
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News Wires | |
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Independent Expert Services | |
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Summary | |
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Questions and Short Problems | |
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Adopt-a-Company Exercises | |
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Performing the Analysis and Writing the Research Report | |
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Starting the Analysis | |
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The Security Analysis Process | |
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Model Research Report | |
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The Analyst's Responsibility | |
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The Cascade of Projections | |
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Selecting Stocks for Study: Top-Down vs. Bottoms-Up | |
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Limited Time and Resources | |
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The Margin of Safety | |
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Summary | |
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Questions and Short Problems | |
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Adopt-a-Company Exercises | |
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Industry Analysis | |
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Background | |
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Organizing an Industry Analysis | |
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Industry Classification | |
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External Factors | |
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Demand Analysis | |
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Supply Analysis in the Industry Study | |
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Profitability, Pricing and the Industry Study | |
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International Competition and Markets | |
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Summary | |
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Questions and Short Problems | |
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Adopt-a-Company Exercises | |
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Company-Specific Analysis | |
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Systematic Approach of a Business Analysis | |
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Overview and Business Description | |
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Products and Markets Section | |
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Production and Distribution | |
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Competition | |
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Other Topics Included in the Business Review | |
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Summary | |
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Questions and Short Problems | |
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Adopt-a-Company Exercises | |
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Financial Statement Analysis of an Established Business | |
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Beginning the Investigation | |
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The Raw Materials of an Analysis | |
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Evolution of the Approach to Financial Statements | |
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Illustration of the Basic Approach | |
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Review of Neiman Marcus Financial Analysis | |
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Management's Projections | |
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Summary | |
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Questions and Short Problems | |
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Adopt-a-Company Exercises | |
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The Limitations of Accounting Data | |
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Basic Accounting Issues | |
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Global Issues | |
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Company-Specific Accounting Issues | |
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The Fundamental Objective of Public Companies | |
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Case Study: Stability Corp | |
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Summary | |
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Questions and Short Problems | |
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Adopt-a-Company Exercises | |
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Financial Analysis and Company Classification | |
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Company Classifications | |
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The Mature Company | |
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The Growth Company | |
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The Cyclical Company | |
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The Declining Company | |
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The Turnaround | |
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The Pioneer | |
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Financial Games | |
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Extra Shares Outstanding? | |
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Summary | |
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Questions and Short Problems | |
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Adopt-a-Company Exercises | |
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Financial Projection Pointers | |
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The Cascade of Projections | |
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The Typical Financial Projection | |
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Alternate Means of Forecasting | |
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Critiquing the Huntsman Chemical Projection | |
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Preparing Projections | |
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Cyclical Company Forecast | |
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Hockey Stick Phenomenon | |
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Summary | |
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Questions and Short Problems | |
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Adopt-a-Company Exercises | |
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Valuation and the Investment Decision | |
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Valuation Methodologies | |
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Assessing Each Methodology | |
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Applying Multiple Methodologies | |
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Summary | |
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Questions and Short Problems | |
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Intrinsic Value and Discounted Cash Flow | |
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Issues in Applying Discounted Cash Flow | |
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Discounted Cash Flow vs. Relative Value | |
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Discounted Cash Flow and the P/E Ratio | |
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The Discounted Cash Flow Valuation Process | |
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Summary | |
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Questions and Short Problems | |
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Discounted Cash Flow: | |
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Choosing the Right Discount Rate | |
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Beta | |
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The Buildup Method for the Equity Rate of Return | |
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Special Cases | |
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Summary | |
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Questions and Short Problems | |
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Adopt-a-Company Exercises | |
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The Relative Value Approach | |
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Real Estate Analogy | |
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What's the Right P/E Ratio? | |
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Case Study: Temporary Staffing Services | |
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Valuing an Initial Public Offering | |
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Balance Sheet Items and Relative Value | |
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How High is Up? | |
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Summary | |
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Questions and Short Problems | |
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Adopt-a-Company Exercises | |
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Marginal Performers | |
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Defining the Problem Company | |
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Small Companies and Relative Value | |
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Summary | |
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Questions and Short Problems | |
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Adopt-a-Company Exercises | |
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The M&A Market, Security Analysis, and Valuation | |
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Understanding Leveraged Buyouts | |
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LBO Mechanics | |
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Case Study: Keane, Inc | |
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How Much Can the PE Firm Pay? | |
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LBO Valuation and the Security Analysis of a Publicly-Traded Company | |
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Strategic Takeover Values | |
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Summary | |
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Questions and Short Problems | |
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Adopt-a-Company Exercises | |
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Sum-of-the-Parts Analysis | |
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Background | |
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Taxes Favor Spin-offs vs. Cash Sales | |
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Sample Sum-of-the-Parts Analysis | |
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Business Division Valuation | |
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Non-Operating Corporate Assets and Liabilities | |
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Unlocking Sum-of-the-Parts Values | |
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Summary | |
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Questions and Short Problems | |
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Adopt-a-Company Exercises | |
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The Investment Recommendation | |
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Summary Top-Down Analysis | |
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Discounted Cash Flow Valuation | |
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Relative Value/Sum-of-the-Parts Valuation Approach | |
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Acquisition Value | |
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Leveraged Buyout Method | |
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Investment Recommendation | |
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Summary | |
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Questions and Short Problems | |
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Adopt-a-Company Exercises | |
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Special Cases | |
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Private Equity | |
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Industry Segmentation | |
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One Trillion Plus Funds Under Management | |
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Private Equity Fund Investors | |
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Fee Structure | |
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Other Fees Charged to Clients | |
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Private Equity Does Not Beat the S&P 500 | |
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Private Equity Funds and Information Collection | |
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Similar Accounting Information | |
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Private Equity Changes to the Public Company Valuation Methodology | |
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Liquidity and Control Adjustments | |
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Summary | |
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Questions and Short Problems | |
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Natural Resource Companies | |
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General Methodology | |
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The Financial Reporting of Natural Resource Companies | |
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Case Study: Encore Acquisition Company | |
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Mining Companies | |
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Summary | |
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Questions and Short Problems | |
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Financial Industry Stocks | |
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Product Lines | |
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The Nature of Financial Assets | |
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Two Sets of Skills | |
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Lending | |
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Large Commercial Banks | |
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Summary | |
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Questions and Short Problems | |
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Insurance Companies | |
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General Background | |
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Principal Functions of an Insurance Company | |
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Insurance Company Regulation | |
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Financial Statement Analysis: P&C Company | |
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Financial Statement Ratios | |
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Life Insurance Companies | |
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Summary | |
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Questions and Short Problems | |
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Highly Speculative Stocks | |
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Background | |
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Discounted Cash Flow | |
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Alternative Assumptions for Ballard Stock | |
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Summary | |
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Questions and Short Problems | |
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Distressed Securities and Turnarounds | |
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Investment Opportunities | |
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Screening Technique | |
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Recognize the Options of an Unsuccessful Turnaround | |
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Financial Analysis of Company with Leverage Problems | |
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The Investment Decision | |
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Evaluating Turnarounds | |
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Liquidations | |
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Summary | |
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Questions and Short Problems | |
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International Stocks | |
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The Role of Security Analysis | |
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American Depository Receipts | |
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Developed Country Markets | |
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Relative Value Multiples | |
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Summary | |
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Questions and Short Problems | |
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The Emerging Markets | |
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Emerging Markets and Security Analysis | |
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Stockpricing Guidelines | |
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Financial Projections | |
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Emerging Market Equity Discount Rate | |
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Relative Value in the Emerging Markets | |
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Summary | |
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Questions and Short Problems | |
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In Conclusion | |
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Asset Booms and Busts | |
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The 2008 Crash: Contributing Causes | |
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Collapse of the U.S. Housing Bubble | |
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Failure of the Referees | |
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The Certainty of Another Crash | |
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How Might Security Analysis and Business Valuation Change? | |
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Summary | |
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Questions and Short Problems | |
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Closing Thoughts | |
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Notes | |
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About the Author | |
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Index | |