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18 Cards in this Set
- Front
- Back
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what is liquidation value |
it represents the value of money that could be realised if an asset or assets is sold separately from its operating organization |
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what is going concern value |
represents the amount a firm could be sold for as a continuing operating business |
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what are the 2 that book value represents |
an asset : the accounting value of an asset ( the assets cost minus its depreciation) a firm : total assets minus liabilities and preferred stock |
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what is market value |
represents the market price of a asset |
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what is intrinsic value |
represents a price a security "ought to have" based on all factors bearing on valuation |
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what is a bond |
it is a long term debt issued by corporation or goverment |
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what does face value of a bond mean |
it is the stated value of a bond |
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what does coupon rate of bonds mean |
it is the state rate of periodical payment. |
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what does the discount rate represent |
it represents the capitalisation rate of a bond. It is also dependant on the risk of the bond. |
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what are the different types of bond |
perpetual bond coupon bond zero-coupon bond semi annual coupon bond |
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Perpetual bond formula? (reduced version) |
V = C/rd C = face value x annual coupon rd = discount rate |
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Non-zero coupon paying bond with finite life formula? (Count annuity and also their maturity) |
V = C/rd * [1- 1/(1+rd)^t] + face value / (1+rd)^t t = time period |
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Zero coupon bonds are? |
no periodical payment bonds that sell at a deep discount. It provides compensation in the form of price appreciation. |
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Formula of value for zero coupon bonds. |
V = face value / (1+rd)^t |
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Semi annual compounding adjustments? |
1) divide ytm by 2 2) multiply n by 2 3) divide c by 2 |
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What are preferred stocks? |
Stock that promises a fixed dividend at the discretion of the board of directors (it is prioritised over common stock in dividends) |
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preferred stock valuation? |
V = Divp / rp
Divp = percentage of par value(?) rp = discount rate |
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