Discount CF Valuation Wk 1 Flashcards

1
Q

Agency Relationship

A

Principal hires an agent to Acton on their behalf to make financial decision making

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2
Q

Agency Problem

A

When there is conflict between the principal and agent

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3
Q

Examples of Agency Problem

A

Separation of ownership

Conflict of interest between shareholders and managers

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4
Q

What is an annuity

A

Annuity has an end period

Payments made periodically

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5
Q

Perpetuity is?

A

CF are infinite

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6
Q

Give two key parts of growing perpetuity

A
  1. CF are infinite

2. grows at a constant rate of g

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