finance3030

annualized rates of return- standard practice to quote annual rate time varying rates of return and the yield curve present value with time-varying interest rate based off us treasury time varying rates of return and the yield curve inflation effect of rising prices without an increase in purchasing power real term actual increase in purchasing power nominal term nominal growth = (1+rate of inflation)* (1+real growth)-1 time-varying rates of return and the yield curve treasury bills- maturities up to 1 year treasury notes - maturities between 1 year to 10 years treasury bonds - maturities greater than 10 years yield curve shapes market approach valuation by market comparison approach identical items must be the same price - law of one price firms with the same attributes should have the same value objective and observable transactions valuation by cash flow ( NPV) approach P/E=1/(k-g) E/P= earnings yield ..........

Corporate Finance the law of one price - impact on local and global commerce theory versus reality -  consequences of wrong prices valuation practices ( highest and best use standard) DCF ( expected cash flows, discount rates) market comparisons( closeness of comparable, strength of attributes, etc.) asset or cost ( not visually applicable for most "going concern" entities goal of finance : valuation Valuation is forward looking ( perspective) Today's price is dependent on future cash flows into infinity historical performance guides our ability to predict future expectations finance studies the measurement of values limitation of finance useful only when elements are quantifiable in monetary terms inability to measure significant qualitative values ( e.g. internal, employee loyalty, etc.) Time Value of Money perfect market assumption no difference in opinion same relevant information is all know to market partici...