Equities - Part 12


This eCourse consists of three modules. Module 1 focuses on some of the measures that investors use when making decisions about equity securities. It demonstrates how to measure the returns on stocks as well as the risks that are associated with equity securities

Module 2 focuses on the use of DCF models by equity analysts. It describes how to use the different types of present value model, namely the dividend discount model and the free cash flow to equity model, to calculate the intrinsic value of a stock. The inputs into the calculations for these models are examined as are the estimates and assumptions that analysts are required to make about these inputs. The problems and limitations associated with using these models to estimate intrinsic value are also covered.

Module 3 focuses on approaches other than DCF analysis that analysts and investors can use to add to the picture of a stock’s intrinsic value. The tutorial describes comparable valuation methods that use market multiples to compare a peer group of companies to the target company. It also covers asset-based valuation, which show the value of a company based on its net assets, and residual income valuation models, which are based on forecasting a company's future residual income or excess earnings.


On completion of this course, you will be able to:
- Calculate the return on an equity security
- Use variance and standard deviation to estimate a stock’s volatility
- Interpret the meaning of beta as a measure of equity risk
- Identify the different types of discounted cash flow (DCF) model that are used to value equities
- Calculate the intrinsic value of a stock using both the dividend discount model and the free cash flow to equity model
- Calculate the various financial metrics and ratios that are used to imply values using comparable multiples
- Recognize how asset-based valuation models can be used to provide a baseline valuation for an equity security
- Identify how economic value added (EVA) calculations are used for residual income valuation


Module 1: Equity Returns Analysis
Topic 1: Measuring Equity Returns
Topic 2: Measuring Equity Risk
Topic 3: Analyzing Stock Betas

Module 2: Equity Valuation - DCF Models
Topic 1: Types of Model
Topic 2: Dividend Discount Models
Topic 3: Free Cash Flow to Equity (FCFE) Models

Module 3: Equity Valuation - Other Methods
Topic 1: Comparable Multiple Valuation Models
Topic 2: Asset-Based Valuation Models
Topic 3: Residual Income Valuation Models


Relevant Subject
Type 1 - Dealing in securities
Type 4 - Advising on securities
Type 6 - Advising on corporate finance
Type 9 - Asset management
SFC:2.50, PWMA:2.50
Non-Member: HK$1115
Staff of Corporate Member: HK$765
All Member: HK$765