Financial Exam Help 123

Month: March 2023

  • Yield Curve Strategies – Dynamic Yield Curve

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    by

    Bill Campbell
    in

    Making Money with Bonds In the article on yield curve strategies in general, I mentioned the two broad ways to make money with bonds: Coupons (more generally, to incorporate synthetic strategies using, for example, swaps: interest payments) Price changes The curriculum breaks down the expected return on a bond in this manner: \begin{align}E\left(R\right) &≈ Coupon\…

  • Yield Curve Strategies – Static Yield Curve

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    by

    Bill Campbell
    in

    Making Money with Bonds In the article on yield curve strategies in general, I mentioned the two broad ways to make money with bonds: Coupons (more generally, to incorporate synthetic strategies using, for example, swaps: interest payments) Price changes The curriculum breaks down the expected return on a bond in this manner: \begin{align}E\left(R\right) &≈ Coupon\…

  • Dividend Discount Models

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    by

    Bill Campbell
    in

    A time-honored method to determine the value of an investment is to discount to the present all of the investment’s (expected) future cash flows, and tot up those present values.  It’s a method we use commonly when valuing bonds, and when valuing projects in which a company is considering investing (e.g., whether or not to…

  • Equity Valuation Models

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    by

    Bill Campbell
    in

    The CFA curriculum discusses a variety of methods for estimating the value of a company’s equity.  The approaches, or models, fall broadly into these categories (covered in separate articles; follow the links): Present value models (also known as discounted cash flow models) Dividend discount models (DDMs) Free cash flow to equity (FCFE) models Free cash…