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Investment Valuation Tools and Techniques for Determining the Value of Any Asset

ISBN-10: 111801152X

ISBN-13: 9781118011522

Edition: 3rd 2012

Authors: Aswath Damodaran

List price: $150.00
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The definitive source of information on all topics related to investment valuation tools and techniquesValuation is at the heart of any investment decision, whether that decision is buy, sell or hold. But the pricing of many assets has become a more complex task in modern markets, especially after the recent financial crisis. In order to be successful at this endeavor, you must have a firm understanding of the proper valuation techniques. One valuation book stands out as withstanding the test of time among investors and students of financial markets, Aswath Damodaran′sInvestment Valuation.Now completely revised and updated to reflect changing market conditions, this third edition comprehensively introduces investment professionals and students to the range of valuation models available and how to chose the right model for any given asset valuation scenario. This edition includes valuation techniques for a whole host of real options, start–up firms, unconventional assets, distressed companies and private equity, and real estate. All examples have been updated and new material has been added.Fully revised to incorporate valuation lessons learned from the last five years, from the market crisis and emerging markets to new types of equity investmentsIncludes valuation practices across the life cycle of companies and emphasizes value enhancement measures, such as EVA and CFROIContains a new chapter on probabilistic valuation techniques such as decision trees and Monte Carlo SimulationAuthor Aswath Damodaran is regarded as one of the best educators and thinkers on the topic of investment valuationThis indispensable guide is a must read for anyone wishing to gain a better understanding of investment valuation and its methods. With it, you can take the insights and advice of a recognized authority on the valuation process and immediately put them to work for you.
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Book details

List price: $150.00
Edition: 3rd
Copyright year: 2012
Publisher: John Wiley & Sons Canada, Limited
Publication date: 4/17/2012
Binding: Hardcover
Pages: 992
Size: 7.75" wide x 10.50" long x 1.75" tall
Weight: 2.596
Language: English

Introduction to Valuation
A Philosophical Basis for Valuation
Generalities about Valuation
The Role of Valuation
Conclusion
Questions and Short Problems
Approaches to Valuation
Discounted Cash Flow Valuation
Relative Valuation
Contingent Claim Valuation
Conclusion
Questions and Short Problems
Understanding Financial Statements
The Basic Accounting Statements
Asset Measurement and Valuation
Measuring Financing Mix
Measuring Earnings and Profitability
Measuring Risk
Other Issues in Analyzing Financial Statements
Conclusion
Questions and Short Problems
The Basics of Risk
What is Risk?
Equity Risk and Expected Return
Alternative Models for Equity Risk
A Comparative Analysis of Equity Risk Models
Models of Default Risk
Conclusion
Questions and Short Problems
Option Pricing Theory and Models
Basics of Option Pricing
Determinants of Option Value
Option Pricing Models
Extensions of Option Pricing
Conclusion
Questions and Short Problems
Market Efficiency�Definition, Tests, and Evidence
Market Efficiency and Investment Valuation
What Is an Efficient Market?
Implications of Market Efficiency
Necessary Conditions for Market Efficiency
Propositions about Market Efficiency
Testing Market Efficiency
Cardinal Sins in Testing Market Efficiency
Some Lesser Sins That Can Be a Problem
Evidence on Market Efficiency
Time Series Properties of Price Changes
Market Reaction to Information Events
Market Anomalies
Evidence on Insiders and Investment Professionals
Conclusion
Questions and Short Problems
Riskless Rates and Risk Premiums
The Risk-Free Rate
Equity Risk Premium
Default Spreads on Bonds
Conclusion
Questions and Short Problems
Estimating Risk Parameters and Costs of Financing
The Cost of Equity and Capital
Cost of Equity
From Cost of Equity to Cost of Capital
Best Practices at Firms
Conclusion
Questions and Short Problems
Measuring Earnings
Accounting versus Financial Balance Sheets
Adjusting Earnings
Conclusion
Questions and Short Problems
From Earnings to Cash Flows
The Tax Effect
Reinvestment Needs
Conclusion
Questions and Short Problems
Estimating Growth
The Importance of Growth
Historical Growth
Analyst Estimates of Growth
Fundamental Determinants of Growth
Qualitative Aspects of Growth
Conclusion
Questions and Short Problems
Closure in Valuation: Estimating Terminal Value
Closure in Valuation
The Survival Issue
Closing Thoughts on Terminal Value
Conclusion
Questions and Short Problems
Dividend Discount Models
The General Model
Versions of the Model
Issues in Using the Dividend Discount Model
Tests of the Dividend Discount Model
Conclusion
Questions and Short Problems
Free Cash Flow to Equity Discount Models
Measuring What Firms Can Return to Their Stockholders
FCFE Valuation Models
FCFE Valuation versus Dividend Discount Model Valuation
Conclusion
Questions and Short Problems
Firm Valuation: Cost of Capital and Adjusted Present Value Approaches
Free Cash flow to the Firm
Firm Valuation: The Cost of Capital Approach
Firm Valuation: The Adjusted Present Value Approach
Effect of Leverage on Firm Value
Adjusted Present Value and Financial Leverage
Conclusion
Questions and Short Problems
Estimating Equity Value per Share
Value of Nonoperating Assets
Firm Value and Equity Value
Management and Employee Options
Value per Share When Voting Rights Vary
Conclusion
Questions and Short Problems
Fundamental Principles of Relative Valuation
Use of Relative Valuation
Standardized Values and Multiples
Four Basic Steps to Using Multiples
Reconciling Relative and Discounted Cash Flow Valuations
Conclusion
Questions and Short Problems
Earnings Multiples
Price-Earnings Ratio
The PEG Ratio
Other Variants on the PE Ratio
Enterprise Value to EBITDA Multiple
Conclusion
Questions and Short Problems
Book Value Multiples
Price-to-Book Equity
Applications of Price�Book Value Ratios
Revenue Multiples and Sector-Specific Multiples
Valuing Financial Service Firms
Valuing Firms with Negative or Abnormal Earnings
Valuing Young or Start-Up Firms
Valuing Private Firms
Aquisitions and Takeovers
Valuing Real Estate
Valuing Other Assets
The Option to Delay and Valuation Implications
The Options to Expand and to Abandon: Valuation Implications
Valuing Equity in Distressed Firms
Value Enhancement: A Discounted Cash Flow Valuation Framework
Value Enhancement: Economic Value Added, Cash Flow Return on Investment, and Other Tools
Probabilistic Approaches in Valuation: Scenario Analysis, Decision Trees, and Simulations
Overview and Conclusion