Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

CFA Level II 2023 > Equity Valuation > Flashcards

Equity Valuation Flashcards

You may prefer our related Brainscape-certified flashcards:
CFA flashcards
1
Q

Alpha

A

An excess risk adjusted return

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Fair Market Value

A

The price at which an asset would change hands when neither has a compulsion to buy/sell. Both participants are informed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Investment Value

A

Value of an asset specific to an individual investor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Absolute Valuation Model

A

Model that tries to specify an asset’s intrinsic value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Asset Based Valuation

A

A type of absolute valuation model that values a cpmpany on the basis of the assets or resources it controls.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Relative Valuation Model

A

Values assets in realtion to other assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Pairs Trading Strategy

A

Investing in a pair of similar stocks, shorting the overvalued and buying the undervalued one.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Conglomerate Discount

A

The idea that companies that operate in multiple, unrelated industries have are priced at a discount to businesses with a narrower focus.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Blockage Factor

A

Price that could be realized if shares of a large bloack were sold in smaller blocks that do not have a liquidity discount.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Present Value Model

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Single Period Dividend Discount Model (DDM)

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Mulitple Period Dividend Dicount Model (DDM)

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Gordon Growth Model

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Perpetuity

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Value as a function of a No-Growth Company + PVGO

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

P/E Formula as a function of No-Growth Company + PVGO

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Justified (Fundamental) P/E

A

P/E that is justifed from a fundamental analysis (like Gordon Growth Model)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Leading P/E

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Trailing P/E

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Two Stage DDM

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

H-Model

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Sustainable Growth Rate

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

ROE Formula (Basic)

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

(Three way) Dupont Analysis of ROE

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

PRAT Model

(Sustainable Growth Formula)

A

(P) Profit Margin
(R) Retention Rate
(A) Asset Turnover
(T) Financial Leverage

26
Q

Discounted FFCF Valuation

A

Subtract Debt from Firm Value to get Value of Equity

27
Q

Weighted Avergae Cost of Capital (WACC) Formula

A
28
Q

Discounted FCFE Valuation

A
29
Q

Constant Growth FCFF Model

A

Subtract Value of Debt from Firm Value to get Equity Value

30
Q

FCFF

Computed from Net Income

A
31
Q

FCFF

Computed from Cash Flow From Operations (CFO)

A
32
Q

FCFE

Computed from FCFF

A
33
Q

FCFE

Computed From Net Income

A
34
Q

FCFE

Computed from CFO

A
35
Q

FCFF

Computed from EBIT

A
36
Q

FCFF

Computed from EBITDA

A
37
Q

Trailing P/E

A

Current Price divided by last 12 month’s EPS

38
Q

Forward P/E

Leading P/E or Prospective P/E

A

Current price divided by expected next 12 month’s EPS

39
Q

Basic EPS VS. Diluted EPS

A

Diluted EPS takes into account the additional number of shares that would be created in the exercise of stock options, grants, conversions, etc.

40
Q

Underlying Earnings

A

Earnings excluding non-recurring items

Also called Persistent, Continuing or Core Earnings

41
Q

Molodovsky Effect

A

High P/E in the bottom of a cycle and low PE at the top of a cycle

42
Q

Normalized EPS

A

EPS based on Mid-Cycle conditions

43
Q

Earnings Yield

A

E/P

Inverse of P/E

44
Q

Justified Forward P/E

Based off of GGM

A
45
Q

Justified Trailing P/E

Based off of GGM

A
46
Q

PEG Ratio

A

P/E divided by the expected earnings growth

47
Q

Book Value of Equity

A

The common shareholders value of equity (Total Assets - Total Liabilities - Preffered Stock)

48
Q

Tangible Book Value per Share

A

Book value of equity minus intangible assets, divided by number of shares

49
Q

Goodwill

A

Excess of purhcase price to fair market value of tangible & identifiable intangible assets

50
Q

Justified P/B

Based of GGM

A
51
Q

Justified P/B

Based off of Residual Income Model

A
52
Q

Forward P/S

Based off of GGM

A
53
Q

Trailing P/S

Based off of GGM

A
54
Q

Enterprise Value

A

Total Market Value of Firm (Debt + Preffered Equity + Common Equity) minus cash & Short Term investments

55
Q

Return on Invested Capital (ROIC)

A

Operating Profit after Tax divided by invested capital

56
Q

Scaled Earnings Surprise

A

Unexpected earnings divided by standard deviation of analyst’s earnings forecasts

57
Q

Standardized Unexpected Earnings (SUE)

A
58
Q

Harmonic Mean

A
59
Q

Weighted Harmonic Mean

A
60
Q
A

CFA Level II 2023 (5 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions