Hi friends,
if anyone could please share the solution for the BKM book or ateast the answer key.
Thanks,
VC
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Hi friends,
if anyone could please share the solution for the BKM book or ateast the answer key.
Thanks,
VC
You can try this link:
http://leeds-faculty.colorado.edu/Madig ... utions.htm
Hey Neetu,
Many thanks.. its the thing that i was looking for....
thanks again :D
Varun
Welcome Varun!
:)
If you find something better, please post it here.
I was working on valuation of high growth companies.
When I calculate the Terminal value, the formula used is:
Final Cash Flow(1+g)/(k-g)
where k = Discount Rate
and g = Long-Term Cash Flow Growth Rate
In my case, k = 8% and g is 10%, this generally doesn't happen and my valuation is -ve.
I am not sure where I am making some mistake. Any ideas???
I am not sure if your assumptions are right or not.
Isn't a growth rate of 10% too high?
I guess you can try verifying those rates... :?:
Did you try to use comparable co.s method to see how much terminal value you get?
Hi Ritesh,
The formula that you are using comes from a sum of a Geometric Progression. If you go back to the derivation of this formula, the basic assumption is k>g.
So, in your case the formula is not valid because k<g.
- Sougata
That was an interesting question and a good answer! :)
Hi Neetu,
Few things you should keep in mind while using that formula is that:
For high growing companies you estimate the years for which the company will remain a high growth firm, and the stages in which it will finally taper down to the perpetual growth (which in most cases will be the GDP growth rate), the formula you have put in is only applicable for the perpetual growth case and not for high-growth years and hence "k" will be greater than "g".
Let me know in case any thing else needs to be clarified.
I agree with Nikhil.
You can use the H-model for such valuations.
Hi,
Can anyone let me know about the Monte Carlo Simulation Analysis for Finance..?
Sneha Gera
What exactly do you want to know?
There are software like @Risk and Crystal Ball that can help you in Monte Carlo Simulation.
- Sougata
Thanks Sougata.
Actually, I want to do a course for Financial Modeling with excel. How can I get the s/w.....??
-Sneha Gera
Hi Sneha & Sougata,
I am CFA-3 level candidate. Actually, most probabilistic financial modeling software are based on Monte Carlo analysis, a risk analysis tool used for managing uncertainty. In simple terms, Monte Carlo analysis combines distributions, and thereby propagating more than just summary statistics. Rather than analytic calculations, Monte Carlo analysis uses intensive random number generation.
A Monte Carlo analysis can be quite easily developed using a random number generator. However several excellent Excel based templates, Excel add-ins and enterprise-grade Monte Carlo simulation software exist that are able to perform random number generation iterations to about 10,000 iterations. Examples of Monte Carlo simulation software include Crystal Ball, @Risk and others, which are readily accessible to financial analysts.
While a Monte Carlo simulation analysis using several thousands of iterations may be perceived as being more analytically robust, invalid statistical assumptions and distributions can create invalid results, leading to inappropriate results. Financial analysts new to statistical and probabilistic approaches are therefore well advised to have a firm understanding of the concept of uncertainty and statistical analysis before attempting Monte Carlo simulation analysis for financial modeling and analysis.
Rakhi Sundriyal
How to decide weather to go for short hedge or long hedge on the basis of Beta (Systematic Risk) ?
Can you please elaborate your question a bit? I mean in what context you are asking this.
Are you asking about Long/Short Equity Hedge Funds?
I have been given Beta (systematic Risk) as 1.4. I have been asked to tell whether I am in long position or short. Also to suggest which hedging strategy would be better ? My Company's Portfolio is $20 million.
How can we decide our existing positions (long or short) on th basis of Beta ?
I have been given Beta (systematic Risk) as 1.4. I have been asked to tell whether I am in long position or short. Also to suggest which hedging strategy would be better ? My Company's Portfolio is $20 million.
How can we decide our existing positions (long or short) on th basis of Beta ?
Dear Vaibhav here my 50 cents
Beta is mathematicalmeasure of volatility of a asset compared to a index or group of assets.Beta value is obtained by analyzing the vast past data of movement of asset and index.So fo taking Long & short position U cant rely on
beta only as beta shows how the price of asset moved compratively to index.
For taking Long & short hedge On any asset class u have to analyze macro and micro economic conditions ,other economical trends ,Big news & lot of other aspects which can be effected by Poltical,demographical events.
Dear Satyam,
Let me just give you my complete problem statement.
Question: I am a portfolio manager with a $20 million growth portfolio that has beta of 1.4 relative to the S&P 500. The S&P 500 futures are trading at 1,150 and the multiplier is 250. I would like to hedge my exposure to market risk over next few months. I have to identify whether a long or short hedge is appropriate.
Now I am confused how to answer on the basis of given information.
Please help...
Dear Satyam,
Let me just give you my complete problem statement.
Question: I am a portfolio manager with a $20 million growth portfolio that has beta of 1.4 relative to the S&P 500. The S&P 500 futures are trading at 1,150 and the multiplier is 250. I would like to hedge my exposure to market risk over next few months. I have to identify whether an long or short hedge is appropriate.
Now I am confused how to answer on the basis of given information.
Please help...
Dear vaibhav,
I am not expert in this domain .But here my 50 cents
You have a idea how Ur portfolio is moving relative to S&P by visualising beta .Now u have to analyze the how the S&P500 is going to move or where u wana bet.If u believe S&P will show volatility Or u are certain abt its direction U can enter in strategy accordingly.
Hello Friends. I am interested in making a career in I-Banking / Equity Research. I am poor in Excel & Other Finance Software skills. Please suggest some ways to fill this gap.
: Muralidhar
Muralidhar:
You can read some books written by John Walkenbach. Check the list of relevant books here...
http://spreadsheetpage.com/index.php/books/
k should be greater than g to apply this formula .
the discount calculation or the or the growth rate you have calculated might be wrong .
Hi,
Does anybody has access to it, if then please post it here as i need to make a portfolio and it would be a great help
Thanks
Manish
You can try the links given below -
http://www.pdf4me.net/pdf-data/elton...-solutions.php
http://www.docstoc.com/docs/47532088...lio-Theory-and
The objective of this paper is to present the common errors in the valuation process to estimate the intrinsic value of a company/asset. The discounting cash flow (DCF) approach is considered to be the most accurate (theoretically), flexible and widely used method. It is for that reason that most analysts prefer to use it for valuing a company/asset. In this paper, we will give attention to some conceptual errors when applying the DCF approach.
Read more about Common errors in the valuation process (DCF)
Thank you for the link. It's useful.:)
A similar article can be found here:
http://www.nd.edu/~scorwin/fin70610/..._LeggMason.pdf
1. Solution for Investments by BKM (Bodie, Kane, Marcus, Ninth Edition) ??
Hi friends,
If anyone could please share the solution for the BKM, 9th Edition book or the answer key.
Thx,
Sandra
Hey Sandra,
You can get the solution for 6th Edition here. Some questions in the 6th and 9th edition are same/similar.
http://leeds-faculty.colorado.edu/Ma...0Solutions.htm
Anita
Hi Anita,
Nope, I looked and checked but did not see problems in the 6th were the same with problems in the 9th edition. But thanks anyway for your advice.
Sandra
Neetu please i need this solution manual .tried ur stated link but not found. can u email me at fahad_najeeb83@yahoo.com
HI,
i want solution for Bodie kane Marcus Investment 6th edition. if anyone has kindly provide it so i can prepare my paper.
regards
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