Lecture 7:Principles of Market Valuation refer to chapter THE COURSE OF FINANCE 2017 SPRING SJTU
Lecture 7: Principles of Market Valuation refer to chapter 7 THE COURSE OF FINANCE 2017 SPRING SJTU 1
Objectives Understand why valuation is important? Explain the law of one price! Understand valuation models! Explain efficient market! THE COURSE OF FINANCE 2017 SPRING SJTU 2
Objectives Understand why valuation is important? Explain the law of one price! Understand valuation models! Explain efficient market! THE COURSE OF FINANCE 2017 SPRING SJTU 2
Chapter 7 Contents 7.1 The relationship between 7.6 Exchange rates an asset's value its price triangular arbitrage 7.2 Value maximization 7.7 Valuation using financial decisions comparables 7.3 The law of one price 7.8 Valuation Models arbitrage 7.9 Accounting measures of 7.4 Arbitrage the law of value one price 7.10 How information is 7.5 Interest rates the law reflected in security prices of one price 7.11 The efficient markets hypothesis THE COURSE OF FINANCE 2017 SPRING SJTU
Chapter 7 Contents 7.1 The relationship between an asset’s value & its price 7.2 Value maximization & financial decisions 7.3 The law of one price & arbitrage 7.4 Arbitrage & the law of one price 7.5 Interest rates & the law of one price 7.6 Exchange rates & triangular arbitrage 7.7 Valuation using comparables 7.8 Valuation Models 7.9 Accounting measures of value 7.10 How information is reflected in security prices 7.11 The efficient markets hypothesis THE COURSE OF FINANCE 2017 SPRING SJTU 3
Introduction Recall that the three pillars of finance are time value of money risk management asset valuation Many financial decisions are,in essence,the determination of an asset's value THE COURSE OF FINANCE 2017 SPRING SJTU
Introduction Recall that the three pillars of finance are time value of money risk management asset valuation Many financial decisions are, in essence, the determination of an asset’s value THE COURSE OF FINANCE 2017 SPRING SJTU 4
Introduction (Continued) The key to asset valuation is comparison of the asset to be valued with a set of assets with similar characteristics and known values By the law of one price,the price of all equivalent assets must be the same THE COURSE OF FINANCE 2017 SPRING SJTU
Introduction (Continued) The key to asset valuation is comparison of the asset to be valued with a set of assets with similar characteristics and known values By the law of one price, the price of all equivalent assets must be the same THE COURSE OF FINANCE 2017 SPRING SJTU 5