VALUATION OF BONDS AND SHARES

I wrote this book Valuation of bonds and shares with the following objectives.

·        To demonstrate to readers that the subject of Valuation of bonds and shares simple to understand, relevant in practice and interesting to learn.

·        To help managers appreciate the logic for making better financial decisions.

·        To explain the concepts and theories of financial derivatives in a simple way so readers could grasp them very easily and be able to put them in to practice.

·        To provide a book that has a comprehensive coverage for Valuation of bonds and shares and their analysis.

·        To create a book that differentiates itself from other books in terms of coverage, presentation.

This book useful to Students, Job Interviews, Investors, Financial advisers, Financial managers and Fund managers to relate theories, concepts and data interpretation to practice.

 

This book Valuation of bonds and shares aims to assist the reader to develop a thorough understanding of the concepts and theories in a systematic way. To accomplish this purpose, the recent thinking in the field of Valuation of bonds and shares has been presented in a most simple, and precise manner.

 

The main features of the book are simple understanding and key concepts.

 

The book contains a comprehensive analysis of topics on Valuation of bonds and shares i.e. Glossary, Valuation of bonds/debentures, valuation of shares, Beta estimation, Cost of equity, Cost of capital, WACC etc. with a view that readers understand financial decisions thoroughly well and are able to evaluate their implications for investors and traders.

 

This book begins with the discussion of fundamental concepts of Valuation of bonds and shares. With this foundation, readers can easily understand the Valuation of bonds and shares.

 

The text material has been structured to focus on Valuation of bonds and shares and discusses the theories, concepts and assumptions.

 

It is hoped that this will facilitate a better understanding of the subject matter.

 

 

CONTENTS

I. GLOSSARY

        Value

        Tangible asset

        Intangible asset

        Financial asset

        Concepts of the value

            Book value

            Replacement value

            Liquidation value

            Market value

        Bond/Debenture

        Features of a bond

            Face value

            Interest rate

            Maturity

        Redemption value

        Market value

II. VALUATION OF BONDS AND DEBENTURES

        Bond/debenture with maturity

        Yield to maturity

        Current yield

        Yield to call

        Bond value and amortization

            Annual interest payments

            Semi-annual interest payments

        Pure discount bonds

        Perpetual bonds

        Bond duration – Interest rate sensitivity

        Yield curve

III. VALUATION OF PREFERENCE SHARES

        Types of preference shares

            Redeemable & Irredeemable

            Cumulative & Non-cumulative

            Transferable & Non-transferable

        Share value with maturity

        Irredeemable preference shares

        Yield on preference shares

IV. VALUATION OF ORDINARY SHARES

        Single-period valuation

        Multi-period valuation

        Growth in dividends

            Constant growth

            Super-normal growth

            Normal growth

            Perpetual growth

            Zero growth

        Earnings model

        Equity capitalization ratio

V. beta estimation and cost of equity

        Beta

        Case with calculation of :-

            Average return on market

            Average return on firm

            Deviations on market returns

            Deviations on firm’s returns

            Variance of firm

            Co-variance of market returns

            Beta

            Alpha

            Characteristic line of a firm

            Correlation between market return and firm

        Cost of Equity

VI. COST OF CAPITAL

        Cost of capital

        Debt issued at par

        Debt issued at Discount

        Sold at discount and redeem at par

        Cost of preference capital

        Cost of Equity share capital

        Cost of Irredeemable preference shares

        Dividend growth rate

            Constant growth

            Normal growth

            Zero growth

        Weighted average cost of capital (WACC)

VII. ANNUITY FACTOR TABLES

         Future value of a lump sum

         Present value of a lump sum

         Future value of an annuity

         Present value of an annuity