The process of determining the price - the value - of an asset.
Questions tagged [valuation]
194 questions
7
votes
1 answer
Simple example of a funding valuation adjustment?
I'm still a bit confused on how a funding valuation adjustment is actually computed. So I'm looking for a simple example of a funding valuation adjustment, preferably a binomial or discrete model, with terms clearly defined mathematically whenever…
user9081230912390
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3 answers
Do stock prices really tend towards a fair valuation?
I recently started working myself into the concepts of valuation. While I find the concept of fair value very interesting and intuitive, I wonder if prices are actually empirically driven by value in the long run.
For convenience, let me summarize…
Katermickie
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3
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Why is market cap used to value equity instead of a self consistent solution?
My claim is that if we use the cost of equity of a levered firm via the DCF method then we make errors. Specifically if we find the firm is under-valued then in truth its more under-valued than we estimate and conversely if we find the firm is…
Borun Chowdhury
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Which quantitative approaches recommended to buy NKE in 1985?
This is a historical quantitative finance question. Here is the NKE annual report from 1985. This company increased in value 500 times from 1985 to 2015. Please advise on quantitative finance approaches which would have recommended to buy NKE in…
ndthl
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1
vote
1 answer
Exposition of Growth in a Perpetuity
Something that's bugged me since I've ever learned anything about finance: Philosophically(?) speaking, why does growth subtract from a perpetuity's return?
I know the mathematical explanation, but it's so counter-intuitive.
Why should a perpetuity…
user3232
1
vote
1 answer
Valuation of repurchase agreement (classic repo)
From my understanding, a classic repo is an agreement for one party to get cash by placing collateral at a certain price and then get the collateral back at maturity by paying the initial cash plus repo interest.
Say, 1m nominal of bond (dirty price…
acchan94
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1
vote
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Tobin's Q calculation using Compustat
I am calculating tobin's Q every quarter using the CRSP/Compustat quarterly dataset. Unfortunately, there are many missing values for the variables used in the tobin's Q formula. for example, if current asset (actq) is missing, there is no tobin's…
duckman
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How to value pricing and ratings? How to quantify best value?
I'm trying to define which hotel offers the best value.
Let's say we have two hotels - A and B.
For A, you pay $10 a night and the rating for the hotel is 9.8.
For B, you pay $8 a night and the rating for the hotel is 9.6.
So for A, you pay $2 more…
law2255
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0 answers
Floating side value of a swap
I have some trouble to understand on valuing the floating side of a swap.
In my book, the value of floating side at the time t is;
$$ P(t,T_0) - P(t,T_n) $$
Where $$ P(t,T_n)$$ denotes the value of zero coupon bond at time t which payoff $1 at the…
FMM
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Risk neutral valuation logic/intuition
I was reading on risk neutral valuation and i ran into this statement "according to the law of one price , if you have two assets with identical expected cash flow , their current prices must be the same( in a perfect market) otherwise we would have…
0
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1 answer
Transaction multiple EV/LTM EBITDA
Envestnet acquired Yodlee in 2015. I need for this transaction the multiple EV (enterprise value) over last twelve months EBITDA. Can anybody help me with this?
In the respective investor relations website they refer only to an amount of $590…
Hira
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S&P P/E Ratio 2008 Spike Explanation
I'm looking at S&P PE ratio chart over time, and there is a large spike around 2008, and I'm trying to understand the reason for this change. Is it simply that earnings declined so sharply that P/E was quickly elevated?
For reference this is an…
The Nightman
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Free cash flows to the firm (FCFF) and no debt
I have a company with zero interest bearing debt and 10M in cash.
Since there is no debt: Am I correct in assuming that the Free cash flows to equity (FCFE) and Free cash flows to the firm (FCFF) will be the same?
Am I correct in assuming that the…
Matthias
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