BF3203
Equity Securities
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Course Description and Scope
The objective of this course is to provide students with a comprehensive coverage of the principles
and techniques in equity securities analysis, especially asset valuation. Valuation is at the heart of
every investment decision, whether that decision is to buy, sell, or hold. Due to the globalization
process and ever-changing dynamics of the modern financial markets, the pricing of any financial
asset has become a more complex task. This course will guide you through the theory and
application of valuation models and highlights their strengths and weaknesses. It will cover the
valuation of conventional going concern firms, financial service firms, start-ups, dot-coms, private
companies, distressed firms, biotechnology, and natural resources firms.
Course Learning Objective
Students should be able to acquire comprehensive coverage of the principles and techniques in
equity securities analysis, especially asset valuation.
Students should be able to understand the theory and able to apply valuation models and highlight
their strengths and weaknesses, valuation of unconventional assets, financial service firms, start-ups,
private companies, dot-coms, and many other traditionally valued assets.
Students are required to apply the valuation techniques that they have learned in class.
Course Assessments
Components
Coursework
Final Examination
Total
Marks
40%
60%
100
Textbook
Damodaran, Aswath, Investment Valuation: Tools and Techniques for Determining the Value
of Any Asset, 3rd edition, John Wiley & Sons, 2012.
Page 1
Distributed by Nanyang Business School, Nanyang Technological University. All Rights Reserved.
Proposed Weekly Schedule
Week
1.
2.
3.
4.
5.
6.
7.
8.
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10.
11.
12.
13.
Topic
Introduction to Equity Analysis and Valuation Approaches
Estimating Discount Rates
Measuring Earnings From Earnings to Cash Flows
Estimating Growth and Terminal Value
Cash & Non-operating assets, Cross-holdings, and ESOS
Equity Valuation: Dividend Discount Models, FCFE Discount Models
Firm Valuation: Cost of Capital and Adjusted Present Value Approaches
Recess Week
Fundamental Principles of Relative Valuation Earnings Multiples
Book Value Multiples, Revenue Multiples and Sector-Specific Multiples
Valuing Financial Service Firms
Valuing Firms with Negative Earnings
Valuing Young or Start-Up Firms
Valuing Private Firms
OGM Valuation: Valuing Equity in Distressed Firms, Biotechnology and Natural
Resources Firms
Acquisitions and Takeovers
Final Examination
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Distributed by Nanyang Business School, Nanyang Technological University. All Rights Reserved.