Equity Investments - DrWaleKesh

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Market Organization and Structure 13 Topics

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a. explain the main functions of the financial system

b. describe classifications of assets and markets

c. describe the major types of securities, currencies, contracts, commodities, and real assets that trade in organized markets, including their distinguishing characteristics and major subtypes

d. describe types of financial intermediaries and services that they provide

e. compare positions an investor can take in an asset

f. calculate and interpret the leverage ratio, the rate of return on a margin transaction, and the security price at which the investor would receive a margin call

g. compare execution, validity, and clearing instructions

h. compare market orders with limit orders

i. define primary and secondary markets and explain how secondary markets support primary markets

j. describe how securities, contracts, and currencies are traded in quote-driven, order-driven, and brokered markets

k. describe characteristics of a well-functioning financial system

l. describe objectives of market regulation

Curriculum End of Chapter Questions

Security Market Indexes 12 Topics

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a. describe a security market index

b. calculate and interpret the value, price return, and total return of an index

c. describe the choices and issues in index construction and management

d. compare the different weighting methods used in index construction

e. calculate and analyze the value and return of an index given its weighting method

f. describe rebalancing and reconstitution of an index

g. describe uses of security market indexes

h. describe types of equity indexes

i. compare types of security market indexes

j. describe types of fixed-income indexes

k. describe indexes representing alternative investments

Curriculum End of Chapter Question

Market Efficiency 8 Topics

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a. describe market efficiency and related concepts, including their importance to investment practitioners

b. contrast market value and intrinsic value

c. explain factors that affect a market’s efficiency

d. contrast weak-form, semi-strong-form, and strong-form market efficiency

e. explain the implications of each form of market efficiency for fundamental analysis, technical analysis, and the choice between active and passive portfolio management

f. describe market anomalies

g. describe behavioral finance and its potential relevance to understanding market anomalies

Curriculum End of Chapter Questions

Overview of Equity Securities 9 Topics

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a. describe characteristics of types of equity securities

b. describe differences in voting rights and other ownership characteristics among different equity classes

c. compare and contrast public and private equity securities

d. describe methods for investing in non-domestic equity securities

e. compare the risk and return characteristics of different types of equity securities

f. explain the role of equity securities in the financing of a company’s assets

g. contrast the market value and book value of equity securities

h. compare a company’s cost of equity, its (accounting) return on equity, and investors’ required rates of return

Curriculum End of Chapter Questions

Company Analysis: Past and Present 6 Topics

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a. describe the elements that should be covered in a thorough company research report

b. determine a company’s business model

c. evaluate a company’s revenue and revenue drivers, including pricing power

d. evaluate a company’s operating profitability and working capital using key measures

e. evaluate a company’s capital investments and capital structure

Curriculum End of Chapter Questions

Industry and Competitive Analysis 6 Topics

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a. describe the purposes of, and steps involved in, industry and competitive analysis

b. describe industry classification methods and compare methods by which companies can be grouped

c. determine an industry’s size, growth characteristics, profitability, and market share trends

d. analyze an industry’s structure and external influences using Porter’s Five Forces and PESTLE frameworks

e. evaluate the competitive strategy and position of a company

Curriculum End of Chapter Questions

Company Analysis: Forecasting 6 Topics

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a. explain principles and approaches to forecasting a company’s financial results and position

b. explain approaches to forecasting a company’s revenues

c. explain approaches to forecasting a company’s operating expenses and working capital

d. explain approaches to forecasting a company’s capital investments and capital structure

e. describe the use of scenario analysis in forecasting

Curriculum End of Chapter Questions

Equity Valuation: Concepts and Basic Tools 14 Topics

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a. evaluate whether a security, given its current market price and a value estimate, is overvalued, fairly valued, or undervalued by the market

b. describe major categories of equity valuation models

c. describe regular cash dividends, extra dividends, stock dividends, stock splits, reverse stock splits, and share repurchases

d. describe dividend payment chronology

e. explain the rationale for using present value models to value equity and describe the dividend discount and free-cash-flow-to-equity models

f. explain advantages and disadvantages of each category of valuation model

g. calculate the intrinsic value of a non-callable, non-convertible preferred stock

h. calculate and interpret the intrinsic value of an equity security based on the Gordon (constant) growth dividend discount model or a two-stage dividend discount model, as appropriate

i. identify characteristics of companies for which the constant growth or a multistage dividend discount model is appropriate

j. explain the rationale for using price multiples to value equity, how the price to earnings multiple relates to fundamentals, and the use of multiples based on comparables

k. calculate and interpret the following multiples: price to earnings, price to an estimate of operating cash flow, price to sales, and price to book value

l. describe enterprise value multiples and their use in estimating equity value

m. describe asset-based valuation models and their use in estimating equity value

Curriculum End of Chapter Questions