ii) adequate return on investment by way of dividends iii) growth prospects/capital appreciation iv) spread of risks, etc. The exercise of security analysis is based on the general assumption that the intrinsic value of a company can be discovered by an assembly and analysis of financial information relating to its operations. This then forms the basis on which the investor could evaluate each stock in the market and determine the extent to which it satisfies his specific
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Yankees. ESTIMATING COST OF EQUITY FOR A PRIVATE FIRM • Basic Problem: Most models of risk and return (including the CAPM) use past prices of an asset to estimate its risk parameters (beta(s)). Private firms and divisions of firms are not traded, and thus do not have past prices. • • Solution 1: Estimate the beta, based upon comparable firms, and after adjusting for risk. o Step 1: Collect a group of publicly traded comparable firms, preferably in the same line of business, but more generally
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4/26/13 Industry: Variety Stores Sector: Retail Costco Wholesale Corp. Investment Thesis Key Statitisics 52 Week Price Range 50-Day Moving Average Estimated Beta Dividend Yield Market Capitalization (In Millions) 3-Year Revenue CAGR Trading Statistics Diluted Shares Outstanding (In Millions) Average Volume (3-Month) Institutional Ownership Insider Ownership EV/EBITDA (LTM) Margins and Ratios 60.00 81.98 109.75 104.26 0.68 $ 0.28 1.76% 47682 12% Costco is the second largest membership
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Statement of Investment Objectives We at Griffin Capital Management aim to provide excellent returns to our investors by minimizing volatility risk and exceeding the performance of the S&P 500 plus five percentage points. The two main objectives of our portfolio managers are to provide consistent returns and protect our investors from the loss of capital. Due to asset allocation restrictions, this portfolio will not hold any ETFs, bonds, mutual funds, and derivatives. Although these restrictions
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illustrates how to calculate beta based on comparable companies and to lever betas to adjust for capital structure; the appropriate risk-less rate and market risk premium; the choice of time period to estimate expected returns and the difference between the geometric and the arithmetic average as a measure of expected returns. SYNOPSIS Marriott Corporation began in 1927, and over the next 60 years, the company grew into one of the leading lodging and food service companies in the US. In 1987, the
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recommendations for the hurdle rates. The year before, Marriott’s sales grew 24%, sales and earnings per share had doubled the last 4 years and the ROE stood at 22%. The strategy of Marriott was to remain a growth company. The goal was to be one of most preferred employer, the most profitable company and a preferred provider. The financial strategy of Marriott was about 4 criteria: 1. Manage rather than own Hotels assets 2. Invest in projects that increase shareholder value 3. Optimize the use
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|1. |Wachowicz Corporation issued 15-year, noncallable, 7.5% annual coupon bonds at their par value of $1,000 one year ago. Today, the | | |market interest rate on these bonds is 5.5%. What is the current price of the bonds, given that they now have 14 years to | | |maturity? | | |
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are included in a WACC calculation. All else equal, the WACC of a firm increases as the beta and rate of return on equity increases, as an increase in WACC notes a decrease in valuation and a higher risk. The WACC of a firm is a very important both to the stock market for stock valuation purposes and to the company's management for capital budgeting purposes. In an analysis of a potential investment by the company, investment projects that have an expected return that is greater than the company's WACC
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Company Background Pioneer Petroleum Corporation (PPC) was formed as a result of several independent firms that operate in oil refining, pipeline transportation, and industrial chemical field merging together. The company has been through several changes since it was established in 1924 and over the years it became an integrated company with many products and services such as plastics, agriculture chemicals, and real-estate development. In 1985, PPC became a hydro-carbons based company, concentrating
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efficiency will also be considered. I will also include in the analysis, beside the performance measurement tools, an analysis if the evolution of the beta factor from the Capital Asset Pricing Model (CAPM). By that, the nature of the investors versus shareholder structure will be analyzed. If there is a significant distortion between the beta factor of the different categories of firms (using shareholder structure as a sampling criteria), then this means that investors already factor in some of
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