Equity Valuation - CFA Level II (2024)
Exam weightage: 10 - 15%
Basic concepts and applications of valuation
Questions when conducting industry and company analysis
Different types of valuation models
Different approaches to PV models
DDM for single and multiple holding periods
Gordon growth model and related concepts
Multistage DDM
Sustainable growth rate (SGR) and Dupont model
Basics of FCFF and FCFE
Calculation of FCFF
Calculation of FCFE
Adjustments in FCFF and FCFE calculation
Factors that affect FCFF and FCFE and other aspects
Valuation using FCF models
Method of comparables vs Method of forecasted fundamentals
Price / Earnings (P/E)
Price / Book Value (P/B)
Price / Sales (P/S)
Price / Cash flow (P/CF)
Price / Dividend and Dividend yield
Enterprise value / EBITDA (EV/EBITDA) and other EV multiples
International considerations and other indicators
Central tendency of a group of multiples
The concept of residual income, EVA, and MVA
Intrinsic value of a stock using residual income model
Single stage and multi-stage residual income models
Strengths, weaknesses, and other aspects of the residual income model
Private company valuation - Differences, adjustments, and other aspects
Income approach for valuation
Market approach for valuation and understanding premiums and discounts