Equity Valuation: Applications and Processes

Free CFA Level II lesson in Equity Valuation. 10 min read, ~1,512 words.

Intrinsic value = PV of all future cash flows at the risk-adjusted rate, compared to market price to identify mispricing. Absolute models (DCF) detect sector-wide overvaluation; relative models (multiples) cannot. SOTP is required for conglomerates: value each segment separately, then subtract capitalized corporate overhead. Conglomerate discount (10-15%) reflects inefficient capital...

What this lesson covers

• Content
• Example 1
• Example 2
• Common Mistakes
• Check Your Understanding
• Exam Shortcuts

Learning objectives

• applications and processes

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