6
Equity InvestmentsModule 6 of 6

Equity Valuation: Concepts and Basic Tools

6

Concepts

6

Formulas

1

Decisions

4

Quiz Questions

Explore the Learning Dashboard

Key Concepts

6 concepts covered in this module.

Intrinsic Value

True worth based on fundamentals. Compare to market price: undervalued if V > P.

Dividend Discount Model (DDM)

V = Σ Dt/(1+r)t. Value of stock = PV of all expected future dividends.

Premium +4 more

Free covers one Quants module. Premium opens all 10 subjects and 59 modules of CFA Level 1.

Formulas

6 essential formulas for this module.

Gordon Growth Model

V0 = D1 / (r - g)

Where: D1 = next year dividend, r = required return, g = constant growth

Multi-Stage DDM

V = Σ Dt/(1+r)t + Vn/(1+r)n

Where: Vn = terminal value using Gordon model

Premium +4 more

Free covers one Quants module. Premium opens all 10 subjects and 59 modules of CFA Level 1.

Decision Frameworks

1 decision frameworks to guide your analysis.

When to use DDM vs Multiples?

  • DDM: mature dividend-paying companies, when dividends are predictable
  • Multiples: quick comparison, when detailed forecasting is impractical
  • EV/EBITDA: comparing firms with different leverage

Mind Map

Visual overview of how concepts connect in this module.

Premium

This module is part of Premium

Free covers one Quants module. Premium opens all 10 subjects and 59 modules of CFA Level 1.

  • 10 subjects · 59 modules
  • 725+ flashcards
Free Study Dashboard

Don't just read Equity Valuation: Concepts and Basic Tools — practice it

Everything on this page becomes interactive on the study dashboard, free.

  • 13 interactive flashcards built from this page
  • 4 exam-style quiz questions with instant scoring
  • Progress tracking across all 6 Equity Investments modules
Open Study Dashboard

No signup required. Create an account anytime to save progress.

Try it right here

Flashcard

Intrinsic Value

Tap to reveal the answer

Answer
True worth based on fundamentals. Compare to market price: undervalued if V > P.
Sample 1 of 5
Study all 13 flashcards on the dashboard

Previous Module

Company Analysis: Past and Present