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Chapter 1 Introduction to Valuation |
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1 | (10) |
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A Philosophical Basis for Valuation |
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1 | (1) |
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Generalities about Valuation |
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2 | (4) |
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6 | (3) |
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9 | (1) |
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Questions and Short Problems |
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9 | (2) |
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Chapter 2 Approaches to Valuation |
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11 | (16) |
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Discounted Cash Flow Valuation |
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11 | (8) |
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19 | (4) |
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Contingent Claim Valuation |
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23 | (2) |
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25 | (1) |
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Questions and Short Problems |
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25 | (2) |
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Chapter 3 Understanding Financial Statements |
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27 | (31) |
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The Basic Accounting Statements |
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27 | (2) |
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Asset Measurement and Valuation |
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29 | (7) |
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36 | (6) |
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Measuring Earnings and Profitability |
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42 | (5) |
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47 | (6) |
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Other Issues in Analyzing Financial Statements |
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53 | (2) |
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55 | (1) |
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Questions and Short Problems |
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55 | (3) |
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Chapter 4 The Basics of Risk |
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58 | (29) |
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58 | (1) |
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Equity Risk and Expected Return |
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59 | (12) |
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Alternative Models for Equity Risk |
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71 | (5) |
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A Comparative Analysis of Equity Risk Models |
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76 | (1) |
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77 | (4) |
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81 | (1) |
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Questions and Short Problems |
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82 | (5) |
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Chapter 5 Option Pricing Theory and Models |
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87 | (24) |
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87 | (2) |
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Determinants of Option Value |
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89 | (1) |
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90 | (17) |
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Extensions of Option Pricing |
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107 | (2) |
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109 | (1) |
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Questions and Short Problems |
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109 | (2) |
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Chapter 6 Market Efficiency---Definition, Tests, and Evidence |
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111 | (43) |
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Market Efficiency and Investment Valuation |
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111 | (1) |
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What Is an Efficient Market? |
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112 | (1) |
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Implications of Market Efficiency |
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112 | (2) |
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Necessary Conditions for Market Efficiency |
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114 | (1) |
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Propositions about Market Efficiency |
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114 | (2) |
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Testing Market Efficiency |
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116 | (4) |
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Cardinal Sins in Testing Market Efficiency |
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120 | (1) |
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Some Lesser Sins That Can Be a Problem |
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121 | (1) |
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Evidence on Market Efficiency |
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122 | (1) |
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Time Series Properties of Price Changes |
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122 | (8) |
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Market Reaction to Information Events |
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130 | (4) |
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134 | (8) |
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Evidence on Insiders and Investment Professionals |
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142 | (7) |
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149 | (1) |
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Questions and Short Problems |
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150 | (4) |
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Chapter 7 Riskless Rates and Risk Premiums |
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154 | (28) |
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154 | (5) |
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159 | (18) |
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177 | (3) |
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180 | (1) |
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Questions and Short Problems |
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180 | (2) |
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Chapter 8 Estimating Risk Parameters and Costs of Financing |
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182 | (47) |
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The Cost of Equity and Capital |
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182 | (1) |
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183 | (27) |
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From Cost of Equity to Cost of Capital |
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210 | (11) |
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221 | (1) |
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222 | (1) |
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Questions and Short Problems |
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223 | (6) |
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Chapter 9 Measuring Earnings |
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229 | (21) |
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Accounting versus Financial Balance Sheets |
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229 | (1) |
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230 | (17) |
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247 | (2) |
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Questions and Short Problems |
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249 | (1) |
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Chapter 10 From Earnings to Cash Flows |
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250 | (21) |
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250 | (8) |
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258 | (10) |
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268 | (1) |
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Questions and Short Problems |
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269 | (2) |
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Chapter 11 Estimating Growth |
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271 | (33) |
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272 | (1) |
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272 | (10) |
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Analyst Estimates of Growth |
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282 | (3) |
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Fundamental Determinants of Growth |
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285 | (16) |
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Qualitative Aspects of Growth |
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301 | (1) |
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302 | (1) |
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Questions and Short Problems |
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302 | (2) |
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Chapter 12 Closure in Valuation: Estimating Terminal Value |
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304 | (19) |
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304 | (14) |
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318 | (2) |
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Closing Thoughts on Terminal Value |
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320 | (1) |
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321 | (1) |
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Questions and Short Problems |
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321 | (2) |
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Chapter 13 Dividend Discount Models |
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323 | (28) |
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323 | (1) |
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324 | (20) |
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Issues in Using the Dividend Discount Model |
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344 | (1) |
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Tests of the Dividend Discount Model |
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345 | (3) |
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348 | (1) |
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Questions and Short Problems |
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349 | (2) |
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Chapter 14 Free Cash Flow to Equity Discount Models |
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351 | (29) |
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Measuring What Firms Can Return to Their Stockholders |
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351 | (6) |
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357 | (15) |
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FCFE Valuation versus Dividend Discount Model Valuation |
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372 | (4) |
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376 | (1) |
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Questions and Short Problems |
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376 | (4) |
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Chapter 15 Firm Valuation: Cost of Capital and Adjusted Present Value Approaches |
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380 | (43) |
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Free Cash flow to the Firm |
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380 | (3) |
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Firm Valuation: The Cost of Capital Approach |
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383 | (15) |
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Firm Valuation: The Adjusted Present Value Approach |
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398 | (4) |
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Effect or Leverage on Firm Value |
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402 | (13) |
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Adjusted Present Value and Financial Leverage |
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415 | (4) |
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419 | (1) |
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Questions and Short Problems |
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419 | (4) |
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Chapter 16 Estimating Equity Value per Share |
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423 | (30) |
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Value of Nonoperating Assets |
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423 | (17) |
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Firm Value and Equity Value |
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440 | (2) |
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Management and Employee Options |
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442 | (6) |
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Value per Share When Voting Rights Vary |
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448 | (2) |
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450 | (1) |
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Questions and Short Problems |
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451 | (2) |
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Chapter 17 Fundamental Principles of Relative Valuation |
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453 | (15) |
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Use of Relative Valuation |
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453 | (1) |
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Standardized Values and Multiples |
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454 | (2) |
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Four Basic Steps to Using Multiples |
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456 | (10) |
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Reconciling Relative and Discounted Cash Flow Valuations |
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466 | (1) |
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467 | (1) |
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Questions and Short Problems |
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467 | (1) |
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Chapter 18 Earnings Multiples |
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468 | (43) |
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468 | (19) |
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487 | (10) |
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Other Variants on the PE Ratio |
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497 | (3) |
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Enterprise Value to EBITDA Multiple |
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500 | (8) |
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508 | (1) |
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Questions and Short Problems |
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508 | (3) |
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Chapter 19 Book Value Multiples |
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511 | (31) |
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511 | (10) |
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Applications of Price--Book Value Ratios |
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521 | (9) |
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Use in Investment Strategies |
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530 | (2) |
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532 | (5) |
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Tobin's Q: Market Value/Replacement Cost |
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537 | (2) |
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539 | (1) |
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Questions and Short Problems |
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539 | (3) |
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Chapter 20 Revenue Multiples and Sector-Specific Multiples |
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542 | (39) |
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542 | (29) |
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Sector-Specific Multiples |
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571 | (6) |
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577 | (1) |
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Questions and Short Problems |
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577 | (4) |
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Chapter 21 Valuing Financial Service Firms |
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581 | (30) |
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Categories of Financial Service Firms |
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581 | (1) |
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What is Unique about Financial Service Firms? |
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582 | (1) |
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General Framework for Valuation |
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583 | (1) |
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Discounted Cash Flow Valuation |
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584 | (15) |
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599 | (1) |
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599 | (6) |
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Issues in Valuing Financial Service Firms |
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605 | (2) |
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607 | (1) |
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Questions and Short Problems |
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608 | (3) |
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Chapter 22 Valuing Firms with Negative or Abnormal Earnings |
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611 | (32) |
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Negative Earnings: Consequences and Causes |
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611 | (4) |
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Valuing Negative Earnings Firms |
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615 | (24) |
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639 | (1) |
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Questions and Short Problems |
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639 | (4) |
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Chapter 23 Valuing Young or Start-Up Firms |
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643 | (24) |
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643 | (1) |
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New Paradigms or Old Principles: A Life Cycle Perspective |
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644 | (2) |
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Venture Capital Valuation |
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646 | (2) |
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General Framework for Analysis |
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648 | (11) |
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659 | (2) |
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661 | (1) |
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Implications for Investors |
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662 | (1) |
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Implications for Managers |
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663 | (1) |
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663 | (2) |
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665 | (1) |
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Questions and Short Problems |
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666 | (1) |
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Chapter 24 Valuing Private Firms |
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667 | (35) |
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What Makes Private Firms Different? |
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667 | (1) |
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Estimating Valuation Inputs at Private Firms |
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668 | (20) |
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Valuation Motives and Value Estimates |
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688 | (5) |
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Valuing Venture Capital and Private Equity Stakes |
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693 | (2) |
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Relative Valuation of Private Businesses |
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695 | (4) |
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699 | (1) |
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Questions and Short Problems |
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699 | (3) |
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Chapter 25 Aquisitions and Takeovers |
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702 | (37) |
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Background on Acquisitions |
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702 | (3) |
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Empirical Evidence on the Value Effects of Takeovers |
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705 | (1) |
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705 | (19) |
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Takeover Valuation: Biases and Common Errors |
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724 | (1) |
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Structuring the Acquisition |
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725 | (5) |
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Analyzing Management and Leveraged Buyouts |
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730 | (4) |
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734 | (1) |
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Questions and Short Problems |
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735 | (4) |
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Chapter 26 Valuing Real Estate |
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739 | (27) |
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Real versus Financial Assets |
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739 | (1) |
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Discounted Cash Flow Valuation |
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740 | (19) |
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Comparable/Relative Valuation |
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759 | (2) |
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Valuing Real Estate Businesses |
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761 | (2) |
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763 | (1) |
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Questions and Short Problems |
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763 | (3) |
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Chapter 27 Valuing Other Assets |
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766 | (15) |
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Cash-Flow-Producing Assets |
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766 | (9) |
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Non-Cash-Flow-Producing Assets |
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775 | (2) |
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Assets with Option Characteristics |
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777 | (1) |
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778 | (1) |
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Questions and Short Problems |
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779 | (2) |
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Chapter 28 The Option to Delay and Valuation Implications |
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781 | (24) |
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The Option to Delay a Project |
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781 | (8) |
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789 | (7) |
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796 | (6) |
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802 | (1) |
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802 | (1) |
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Questions and Short Problems |
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803 | (2) |
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Chapter 29 The Options to Expand and to Abandon: Valuation Implications |
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805 | (21) |
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805 | (7) |
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When Are Expansion Options Valuable? |
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812 | (3) |
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Valuing a Firm with the Option to Expand |
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815 | (2) |
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Value of Financial Flexibility |
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817 | (3) |
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820 | (3) |
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Reconciling Net Present Value and Real Option Valuations |
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823 | (1) |
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823 | (1) |
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Questions and Short Problems |
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824 | (2) |
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Chapter 30 Valuing Equity in Distressed Firms |
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826 | (15) |
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Equity in Highly Levered Distressed Firms |
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826 | (2) |
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Implications of Viewing Equity as an Option |
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828 | (3) |
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Estimating the Value of Equity as an Option |
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831 | (5) |
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Consequences for Decision Making |
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836 | (3) |
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839 | (1) |
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Questions and Short Problems |
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839 | (2) |
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Chapter 31 Value Enhancement: A Discounted Cash Flow Valuation Framework |
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841 | (28) |
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Value-Creating and Value-Neutral Actions |
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841 | (1) |
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842 | (17) |
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859 | (5) |
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Closing Thoughts on Value Enhancement |
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864 | (1) |
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865 | (1) |
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Questions and Short Problems |
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865 | (4) |
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Chapter 32 Value Enhancement: Economic Value Added, Cash Flow Return on Investment, and Other Tools |
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869 | (25) |
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870 | (14) |
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Cash Flow Return on Investment |
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884 | (6) |
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A Postscript on Value Enhancement |
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890 | (1) |
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891 | (1) |
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Questions and Short Problems |
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891 | (3) |
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Chapter 33 Probabilistic Approaches in Valuation: Scenario Analysis, Decision Trees, and Simulations |
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894 | (31) |
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894 | (5) |
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899 | (9) |
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908 | (11) |
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An Overall Assessment of Probabilistic Risk-Assessment Approaches |
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919 | (2) |
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921 | (1) |
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Questions and Short Problems |
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921 | (4) |
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Chapter 34 Overview and Conclusion |
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925 | (14) |
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Choices in Valuation Models |
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925 | (1) |
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Which Approach Should You Use? |
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926 | (3) |
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Choosing the Right Discounted Cash Flow Model |
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929 | (4) |
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Choosing the Right Relative Valuation Model |
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933 | (4) |
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When Should You Use the Option Pricing Models? |
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937 | (1) |
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938 | (1) |
References |
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939 | (15) |
Index |
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954 | |