{"product_id":"equity-valuation-risk-and-investment-isbn-9780470226407","title":"Equity Valuation, Risk, and Investment","description":"Author Peter Stimes’s analysis of the investment process has long been inspired by some of the best minds in the world of finance, yet some of the ways in which he approaches this discipline are truly unique. In \u003ci\u003eEquity Valuation, Risk, and Investment,\u003c\/i\u003e Stimes shares his extensive expertise with you and reveals how practitioners can integrate and apply both the theory and quantitative analysis found in finance to the day-to-day decisions they must make with regard to important investment issues.  Foreword.  \u003cp\u003ePreface.\u003c\/p\u003e \u003cp\u003eAbout the Author.\u003c\/p\u003e \u003cp\u003eChapter 1. Introduction.\u003c\/p\u003e \u003cp\u003eTheoretical Precision or Theoretical Resilience?\u003c\/p\u003e \u003cp\u003ePractical Difficulties as Well.\u003c\/p\u003e \u003cp\u003eOverview of Our Analysis.\u003c\/p\u003e \u003cp\u003eChapter 2. Inflation Protected Bonds as a Valuation Template.\u003c\/p\u003e \u003cp\u003eThe Formulas Behind the Intuition.\u003c\/p\u003e \u003cp\u003eTIPS versus Traditional Fixed-Rate Bonds – Measuring the Differences.\u003c\/p\u003e \u003cp\u003eA Peek Ahead.\u003c\/p\u003e \u003cp\u003eChapter 3. Valuing Uncertain, Perpetual Income Streams.\u003c\/p\u003e \u003cp\u003eThe Mathematical Development of Un-leveraged Firm Valuation.\u003c\/p\u003e \u003cp\u003eWhat Does the Valuation Formula Tell Us About Sensitivity to Inflation?\u003c\/p\u003e \u003cp\u003eSensitivity to Real Discount Rates and Growth Factors.\u003c\/p\u003e \u003cp\u003eThe Comparison with a Traditional Model of Firm Valuation.\u003c\/p\u003e \u003cp\u003eChapter 4. Valuing a Leveraged Equity Security.\u003c\/p\u003e \u003cp\u003eLeverage in the Presence of Corporate Income Taxes.\u003c\/p\u003e \u003cp\u003eFrom Theory to Practice – Valuing an Enterprise When the Discount Rates are Known\u003c\/p\u003e \u003cp\u003eFrom Theory to Practice Part II – \"Reverse Engineering\" or Inferring Discount Rates from Observed Market Prices.\u003c\/p\u003e \u003cp\u003eChapter 4 Supplement: The Relationship between the Leveraged Equity Discount Rate and the Debt to Capital Ratio for Highly Leveraged Companies.\u003c\/p\u003e \u003cp\u003eChapter 5. Case Studies in Valuation during the Recent Decade.\u003c\/p\u003e \u003cp\u003eCase 1: Coca-Cola (\"KO\").\u003c\/p\u003e \u003cp\u003eCase 2: Intel (\"INTC\").\u003c\/p\u003e \u003cp\u003eCase 3: Procter \u0026amp; Gamble (\"PG\").\u003c\/p\u003e \u003cp\u003eCase 4: Enron (\"ENE\").\u003c\/p\u003e \u003cp\u003eTying Up the Package:  The Practical Lessons from All Four Cases.\u003c\/p\u003e \u003cp\u003eChapter 6. The Treatment of Mergers and Acquisitions.\u003c\/p\u003e \u003cp\u003eGeneralizing from the P\u0026amp;G\/Gillette Example.\u003c\/p\u003e \u003cp\u003eApplicability of the Results under Alternate Merger Terms.\u003c\/p\u003e \u003cp\u003eAnalytical Postscript 1: Common Stock Buybacks and Issuances \u003cu\u003eOutside\u003c\/u\u003e the Merger Framework.\u003c\/p\u003e \u003cp\u003eAnalytical Postscript 2: A Brief Word on Executive Stock Option Grants.\u003c\/p\u003e \u003cp\u003eChapter 7. A Fair Representation? Broad Sample Testing Over a Ten-Year Market Cycle.\u003c\/p\u003e \u003cp\u003eSample Descriptive Data.\u003c\/p\u003e \u003cp\u003eThe Basic Valuation Results.\u003c\/p\u003e \u003cp\u003ePredictive Strength of the Model, the Whole Period.\u003c\/p\u003e \u003cp\u003ePredictive Strength of the Model, Sub-Periods.\u003c\/p\u003e \u003cp\u003eChapter 8. Price Volatility and Underlying Causes.\u003c\/p\u003e \u003cp\u003eDeriving the Formula for Price Changes.\u003c\/p\u003e \u003cp\u003eTranslating the Price Change Formula into Volatility Estimates.\u003c\/p\u003e \u003cp\u003eDigression: The Impact of Debt Leverage on Equity Volatility.\u003c\/p\u003e \u003cp\u003eObtaining the Volatility of the Underlying Variables.\u003c\/p\u003e \u003cp\u003eChapter 9. Constructing Efficient Portfolios.\u003c\/p\u003e \u003cp\u003eExtracting Expected Equity Returns from Observed Price\/Earnings Ratios – Part I.\u003c\/p\u003e \u003cp\u003eExtracting Expected Equity Returns from Observed Price\/Earnings Ratios – Part II.\u003c\/p\u003e \u003cp\u003eExtracting Expected Equity Returns from Observed Price\/Earnings Ratios – Part III.\u003c\/p\u003e \u003cp\u003eCreating Efficient Portfolios – The Unconstrained Case.\u003c\/p\u003e \u003cp\u003eCreating Efficient Portfolios – The Case Where Asset Weights Are Required To Be Non-Negative.\u003c\/p\u003e \u003cp\u003eComputing the Variance\/Covariance Matrix Inputs.\u003c\/p\u003e \u003cp\u003eChapter 10. Selecting among Efficient Portfolios; Making Dynamic Rebalancing Adjustments.\u003c\/p\u003e \u003cp\u003eReconciling Portfolio Desirability and Feasibility.\u003c\/p\u003e \u003cp\u003eTurning Theory into Easily Calculated Results.\u003c\/p\u003e \u003cp\u003eAdjusting for Changes in Long-Term Expected Returns on Common Equity.\u003c\/p\u003e \u003cp\u003eAdjusting for More General Changes in Risk-Adjusted Expected Returns.\u003c\/p\u003e \u003cp\u003eRecapitulation and an Important Caveat.\u003c\/p\u003e \u003cp\u003eChapter 11. How Did We Arrive Here Historically? Where Might We Go Prospectively?\u003c\/p\u003e \u003cp\u003eThe Next Crises of Confidence.\u003c\/p\u003e \u003cp\u003eSome Answers Begin to Emerge.\u003c\/p\u003e \u003cp\u003eWhat if Everyone Followed this Type of Model and Investing?\u003c\/p\u003e \u003cp\u003eThe Next Steps.\u003c\/p\u003e \u003cp\u003eAppendix A. Mathematical Review of Growth Rates for Earnings, Dividends, and Book Value per Share.\u003c\/p\u003e \u003cp\u003eConstant Growth Rate Characterization.\u003c\/p\u003e \u003cp\u003eTransition from One Long-Term Growth Rate to Another.\u003c\/p\u003e \u003cp\u003eFocus on Share Growth Impacts.\u003c\/p\u003e \u003cp\u003eAppendix B. Sustainable and Non-Sustainable Inflation Rates.\u003c\/p\u003e \u003cp\u003eThe Impact of Monetary Policy and Interest Rates on Price Level Changes.\u003c\/p\u003e \u003cp\u003eThe Impact of \"Real Shocks\" on Measured Price Level Changes.\u003c\/p\u003e \u003cp\u003eDrawing Correct Inferences.\u003c\/p\u003e \u003cp\u003eAppendix C. Deriving the \"Equity Duration\" Formula.\u003c\/p\u003e \u003cp\u003eAppendix D. The Traditional Growth\/Equity Valuation Formula.\u003c\/p\u003e \u003cp\u003eAppendix E. Adjustments Required to the Traditional Growth\/Equity Valuation Formula in Order to Preserve Inflation Neutrality.\u003c\/p\u003e \u003cp\u003eAppendix F. Brief Recapitulation of the Miller 1977 Capital Structure Irrelevance Theorem.\u003c\/p\u003e \u003cp\u003eAppendix G. Time Series Charts of Un-leveraged, Inflation Adjusted Discount Rate Estimates.\u003c\/p\u003e \u003cp\u003eAppendix H. Comparison of Volatility of Pre-Tax and After-Tax Income.\u003c\/p\u003e \u003cp\u003eAppendix I. Relationship between Observed P\/E Ratios and Nominal Interest Rates.\u003c\/p\u003e \u003cp\u003eAppendix J. Additional Background on Mathematical Optimization Subject to Constraint Conditions.\u003c\/p\u003e \u003cp\u003eAppendix K. Derivation of Asset Class Covariances.\u003c\/p\u003e \u003cp\u003eAppendix L. Expected Return and Variance\/Covariance Inputs Underlying Chapter 9 and Chapter 10 Portfolio Examples.\u003c\/p\u003e \u003cp\u003eBibliography.\u003c\/p\u003e \u003cp\u003eIndex.\u003c\/p\u003e  \u003cp\u003ePeter C. Stimes, CFA, is a retired vice president and principal of Flaherty \u0026amp; Crumrine Incorporated. During his sixteen years with F\u0026amp;C, Stimes acted as a portfolio manager, head of quantitative research and securities analysis, and spent several years as treasurer and CFO of the closed-end funds managed by F\u0026amp;C. Stimes is actively involved with the CFA program and has been part of the CFA Voluntary Continuing Education Program since 1985. He has written and coauthored papers presented before the CFA Institute and various regulatory and legislative bodies. Stimes received both his undergraduate degree and his MBA from the University of Chicago.\u003c\/p\u003e  \u003cp\u003eAmazing strides in the area of financial economics have sparked some dramatic transformations in the field of investment management. We've seen the development of the idea that equities can be valued on the basis of discounted cash flow streams to perpetuity. And in more recent years, we've welcomed the rigorous theory of derivatives pricing and grappled with questions of just how efficient financial markets may or may not be.\u003c\/p\u003e \u003cp\u003ePeter Stimes's analysis of the investment process has long been inspired by some of the best minds in the world of finance, including Martin Leibowitz, Merton Miller, and Eugene Fama, yet some of the ways in which he approaches this discipline are truly unique. In Equity Valuation, Risk, and Investment, Stimes shares his extensive expertise with you and reveals how practitioners—from portfolio managers to policy makers—can integrate and apply both the theory and quantitative analysis found in finance to the day-to-day decisions they must make with regard to important investment issues.\u003c\/p\u003e \u003cp\u003eWritten in a straightforward and accessible style, this reliable resource skillfully details a model—which is consistent with the fundamental principles of modern finance, but can operate in an environment where there are still unsettled questions—that provides invaluable insights into valuation, risk, and the construction of equity portfolios. This model, which is totally transparent, is also extraordinarily comprehensive.\u003c\/p\u003e \u003cp\u003eIn order to understand both the theoretical and practical concerns surrounding this method, Equity Valuation, Risk, and Investment opens with a brief discussion of the valuation of default-free debt securities—both traditional and inflation-protected bonds. From here, it quickly moves on to address other essential aspects of this approach, including the valuation of uncertain, perpetual income streams as well as leveraged equity securities. Along the way, you'll receive an executive education on everything from price volatility to constructing efficient portfolios and performing dynamic rebalancing adjustments.\u003c\/p\u003e \u003cp\u003eAs a practitioner, Stimes will only use a model that can be effectively implemented in real-life situations. So he has included case studies of several large companies, such as Coca-Cola, Intel, and Procter \u0026amp; Gamble, to help you deal with issues that may arise when valuing \"high growth\" companies, evaluating the impact of common stock buybacks, and assessing mergers and acquisitions.\u003c\/p\u003e \u003cp\u003eFilled with in-depth insights and valuable advice, Equity Valuation, Risk, and Investment has what you need to succeed in today's fast-paced world of finance.\u003c\/p\u003e  \u003cp\u003ePraise for Equity Valuation, Risk, And Investment\u003c\/p\u003e \u003cp\u003e\"Equity Valuation, Risk, and Investment pulls off the difficult feat of making an original contribution to the core of investment theory. With a combination of mathematical rigor, historical perspective, and clear exposition, Peter Stimes provides invaluable insights into valuation and portfolio construction.\"\u003cbr\u003e —Martin Fridson, CFA, Publisher, Leverage World\u003c\/p\u003e \u003cp\u003e\"Peter Stimes translates the arcana of valuation models into common sense and plain English. This book will be a useful reference for anyone who is focused on fundamental measures of valuation as part of their investment process.\"\u003cbr\u003e —Rob Arnott, Chairman, Research Affiliates, LLC, Editor Emeritus, Financial Analysts Journal\u003c\/p\u003e \u003cp\u003e\"Peter Stimes successfully integrates his years of practical experience in both fixed income and equity markets to propose an altogether new way of considering risk and valuation in equity portfolios. He does this in large part by applying insights derived from recent capital market innovations to the work of previous academicians and practitioners, such as Leibowitz, Fama, and Miller. Among other things, what emerges calls into question much of the codification of modern equity markets (growth vs. value, large-cap vs. small, significance of P\/E ratios, etc.) and cogently argues for portfolio managers and fiduciaries to consider new ways of discovering opportunities within these markets.\"\u003cbr\u003e —Lawrence B. Zuntz, former managing director, Institutional Business Division, Strong Capital Management\u003c\/p\u003e \u003cp\u003e\"This book is an important resource for equity investors, in particular value investors. Peter Stimes, using his extensive investment experience and thorough understanding of financial theory and mathematics, develops, explains, and verifies the validity of an equity valuation model that adjusts for the effects of inflation. The book is written in a reader-friendly style.\"\u003cbr\u003e —Kevin Larson, CFA, Senior Vice President, CFO, and Treasurer, UniSource Energy Corporation\u003c\/p\u003e \u003cp\u003e\"Behavioral finance, inflation adjusted equities, and a well thought out plan for long-term investment are ably described by Peter Stimes in his new book. His insight and experience have been used to produce an investment approach to help ameliorate the possible upcoming financial tsunami caused by retiring baby boomers. Investors, of all ages, can profit from applying his model to their investments.\"\u003cbr\u003e —Jeanne M. Boeh, PhD, Chair and Associate Professor, Economics Department, Augsburg College\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47989152841957,"sku":"NP9780470226407","price":85.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9780470226407.jpg?v=1761783010","url":"https:\/\/k12savings.com\/es\/products\/equity-valuation-risk-and-investment-isbn-9780470226407","provider":"K12savings","version":"1.0","type":"link"}