New answers tagged valuation
1
After announcement, in December, of the intention to call the bond in April at 11 the market price fell to 11 and apparently remained at 11 throughout January.
The broker could have purchased the bond at 11 mid January (no fee or commission) and received back in April a value of 11.15 (i.e. principal plus 6% annual interest chargable for 3 months).
The ...
1
Note that CF1 is a weighted average of possible future outcomes, about which it is possible for different investors to have different beliefs and risk preferences.
NPV = -I + sum(p(i) * CFi1) /(1+k) across i possible outcomes
If your beliefs about B give you confidence it's on the efficient frontier, then there is indeed no reason to buy A. B is already ...
2
The assumption that the discount rate should be derived from the IRR of an alternative investment is not correct.
Commonly the WACC of the company (or the WACC of the funds needed for the investment if it is standalone) is used. If this is not available, you could make use of a combination of publicly available rates and some risk-adjustments: risk-free ...
2
I am not an expert on GIPS, with its many pages of rules, but I do remember that under GIPS Private Equity results are to be given in terms of IRR (Internal Rate of Return). In most other cases (stock/bond portfolios for example) GIPS requires TWR (Time Weighted Return) and forbids the use of IRR.
To compute the IRR we need the dates and amounts of cash ...
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