Chapter 4 The valuation of Long-Term Securities 4-1
4-1 Chapter 4 The Valuation of Long-Term Securities
The valuation of Long-Term Securities n Distinctions Among Valuation Concepts a Bond valuation o Preferred stock valuation Common stock valuation n Rates of Return(or Yields) 4-2
4-2 The Valuation of Long-Term Securities Distinctions Among Valuation Concepts Bond Valuation Preferred Stock Valuation Common Stock Valuation Rates of Return (or Yields)
What is value? o Liquidation value represents the amount of money that could be realized if an asset or group of assets is sold separately from its operating organization o Going-concern value represents the amount a firm could be sold for as a continuing operating business. 4-3
4-3 What is Value? Going-concern value represents the amount a firm could be sold for as a continuing operating business. Liquidation value represents the amount of money that could be realized if an asset or group of assets is sold separately from its operating organization
What is value? o Book value represents either (1)an asset; the accounting value of an asset a the asset's cost minus its accumulated depreciation (2)a firm: total assets minus liabilities and preferred stock as listed on the balance sheet 4-4
4-4 What is Value? (2) a firm: total assets minus liabilities and preferred stock as listed on the balance sheet. Book value represents either (1) an asset: the accounting value of an asset -- the asset‘s cost minus its accumulated depreciation;
What is value? o Market value represents the market price at which an asset trades D Intrinsic value represents the price a security ought to have ?based on al factors bearing on valuation 4-5
4-5 What is Value? Intrinsic value represents the price a security ought to have?based on all factors bearing on valuation. Market value represents the market price at which an asset trades