This article throws light upon the top five categories for classification of valuation models. The categories are: 1. One-Period Valuation Model 2. Two-Period Valuation Model 3. n-Period Valuation Model 4. Dividend Valuation Model 5. Earnings Capitalisation Model. Category # 1. One-Period Valuation Model: Suppose an investor plans to buy an equity share to hold it for one year and then [...]
After reading this article you will learn about the Valuation of Securities:- 1. Debenture Valuation 2. Share Valuation 3. Equity Share Valuation. Debenture Valuation: A bond is an instrument of debt issued by a business house or a government unit. The bonds may be issued at par, premium or discount. The par value is the amount stated on the face [...]
The value of an equity share is a function of cash inflows expected by the investors and the risk associated with the cash inflows. It is calculated by discounting the future stream of dividends at the required rate of return, called the capitalisation rate. The required rate of return depends upon the element of risk associated with investment in shares. [...]