ECON 2560 Lecture Notes - Lecture 1: Dividend Discount Model, Dividend Policy, Capital Asset Pricing Model
8 Dec 2015
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Document Summary
The following is a list of some of the major concepts that have been covered during the course that you should make sure you understand in your preparation for the final exam. 1 goals and governance of the firm. The goal of managers is to maximize firm value. Present values of: single cash flow, annuity, and perpetuity. Relationships between - coupon rate, ytm, current yield, rates of return, and prices. Relationships between risk and maturity, risk and coupon rate. Dividend discount model: no growth, constant growth, non-constant growth, sustainable growth rate. Relationship between price and growth rate, roe, plowback ratio, discount rate. 8 net present value and other investment criteria. Calculation of npv, payback, discounted payback, profitability index (note: you will not be asked to calculate an irr for anything more than a single cash flow) Shortcomings of payback, discounted payback, irr, profitability index. Equivalent annual cash flows - projects with unequal lives, replacement.
