- CFA Exams
- 2024 Level I
- Topic 6. Equity Investments
- Learning Module 8. Equity Valuation: Concepts and Basic Tools
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Learning Outcome Statements PDF Download
| 1. Estimated Value and Market Price evaluate whether a security, given its current market price and a value estimate, is overvalued, fairly valued, or undervalued by the market describe major categories of equity valuation models | |
| 2. Background for the Dividend Discount Model describe regular cash dividends, extra dividends, stock dividends, stock splits, reverse stock splits, and share repurchases describe dividend payment chronology | |
| 3. Present Value Models: The Dividend Discount Model explain the rationale for using present value models to value equity and describe the dividend discount and free-cash-flow-to-equity models calculate and interpret the intrinsic value of an equity security based on the Gordon (constant) growth dividend discount model or a two-stage dividend discount model, as appropriate identify characteristics of companies for which the constant growth or a multistage dividend discount model is appropriate explain advantages and disadvantages of each category of valuation model | |
| 4. Preferred Stock Valuation calculate the intrinsic value of a non-callable, non-convertible preferred stock | |
| 5. Multiplier Models explain the rationale for using price multiples to value equity, how the price to earnings multiple relates to fundamentals, and the use of multiples based on comparables calculate and interpret the following multiples: price to earnings, price to an estimate of operating cash flow, price to sales, and price to book value | |
| 6. Enterprise Value describe enterprise value multiples and their use in estimating equity value | |
| 7. Asset-Based Valuation describe asset-based valuation models and their use in estimating equity value |
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