The following points highlight the three main types of fundamental valuation of securities in a company. The types are:- 1. Valuation of Convertible Bonds/Debentures 2. Valuation of 'Rights' 3. Valuation of Bonds. Type # 1. Valuation of Convertible Bonds/Debentures: Convertibles enjoy the benefits of both debt (initially) and equity (later). The terms of conversion will decide the pricing of these [...]
Normally, any Company follows the accounting norms in valuation of all the assets and liabilities, as laid down by the Institute of Chartered Accountants. Subject to these guidelines, the accounting practices vary from company to company. When a company is due to pay interest or repay the principal, these become contingent liabilities, due at specified future dates. They are paid [...]
The following points highlight the top six pricing models used for the valuation of securities. The models are:- 1. Constant Growth Model 2. Two Stage Dividend Model 3. Dividend Capitalisation Model 4. Earnings Capitalisation Model 5. P/E Ratio Model 6. Other Models. 1. Constant Growth Model: For equity securities, the market price depends upon the discounted future dividends or earnings [...]