Session 16 (Val MBAs): intrinsic Value - Heading to closure!
from Aswath Damodaran Hosted by Aswath Damodaran
In this quiz-shortened session, after the second quiz, we continued with our discussion of intrinsic valuation, by first finishing our discussion of emerging market companies before turning to financial service firms . For decades, we have valued banks using the dividend discount model, simply because getting cash flows is so difficult, but that approach is built on trusting management at banks to behave sensibly (paying out what they can afford to in dividends) and regulators to do the same. For me, that trust was breached in 2008, and I present a way of estimating FCFE for a bank, using investment in regulatory capital as my stand in for reinvestment. Next session, we will wrap up the valuation section and start on pricing. If you are interested in reading more about valuing financial service companies, try this link:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1798578 The Deutsche Bank post is here:http://aswathdamodaran.blogspot.com/2016/10/deutsche-bank-greek-tragedy-at-german.htmlSlides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session16slides.pdfPost class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session16Ctest.pdfPost class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session16Csoln.pdf
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