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Learning Outcome Statements PDF Download
|1. Streams of Expected Cash Flows|
compare dividends, free cash flow, and residual income as inputs to discounted cash flow models and identify investment situations for which each measure is suitable;
|2. The Dividend Discount Model|
calculate and interpret the value of a common stock using the dividend discount model (DDM) for single and multiple holding periods;
|3. The Gordon Growth Model|
calculate the value of a common stock using the Gordon growth model and explain the model's underlying assumptions;
calculate the value of non-callable fixed-rate perpetual preferred stock;
calculate and interpret the implied growth rate of dividends using the Gordon growth model and current stock price;
describe strengths and limitations of the Gordon growth model and justify its selection to value a company's common shares;
|4. The Present Value of Growth Opportunities|
calculate and interpret the present value of growth opportunities (PVGO) and the component of the leading price-to-earnings ratio (P/E) related to PVGO;
|5. Gordon Growth Model and the P/E Ratio|
calculate and interpret the justified leading and trailing P/Es using the Gordon growth model;
|6. The Growth Phase, Transitional Phase, and Maturity Phase of a Business|
explain the growth phase, transitional phase, and maturity phase of a business;
|7. Multistage Dividend Discount Models|
explain the assumptions and justify the selection of the two-stage DDM, the H-model, the three-stage DDM, or spreadsheet modeling to value a company's common shares;
describe terminal value and explain alternative approaches to determining the terminal value in a DDM;
calculate and interpret the value of common shares using the two-stage DDM, the H-model, and the three-stage DDM;
explain the use of spreadsheet modeling to forecast dividends and to value common shares;
evaluate whether a stock is overvalued, fairly valued, or undervalued by the market based on a DDM estimate of value.
|8. Estimating and Calculating the Implied Expected Rate of Return|
estimate a required return based on any DDM, including the Gordon growth model and the H-model;
|9. Sustainable Growth Rate|
calculate and interpret the sustainable growth rate of a company and demonstrate the use of DuPont analysis to estimate a company's sustainable growth rate;
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