Absence of Arbitrage Valuation

1. Asset Pricing Models 12 1.1. Future Value 1.2. Present Value 1.3. Perpetuities 1.4. Annuities 1.5. Capital Asset Pricing Model 1.5.1. The Case of Two Risky Securities 1.5.2. The Case of Multiple Risky Securities 1.6. Fama-French Three-Factor Model 1.7. Carhart Four-Factor Model 1.8. Arbitrage Pricing Theory 1.9. Macroeconomic Multi-Factor Models 2. Discounted Cash Flow Valuation 2.1. Dividend Growth Models 2.1.1. Single-Stage Models 2.1.2. Two-Stage Models 2.1.3. Three-Stage Models 2.2. Equity Free Cash Flow 2.2.1. Single-Stage FCFE Model 2.2.2. Two-Stage FCFE Model 2.2.3. Three-Stage FCFE Model 2.3. Firm Free Cash Flow 2.3.1. Single-Stage FCFF Mode 2.3.2. Two-Stage FCFF Model 2.3.3. Three-Stage FCFF Model 3. Relative Valuation with Equity and Value Multiples 3.1. Equity Multiples 3.1.1. Price-Dividend Ratio 3.1.2. Price-Earnings Ratio 3.1.3. Price-to-Book Ratio 3.1.4. Price-Sales Ratio 3.2. Value Multiples 3.2.1. Value-to-Income Ratio 3.2.2. Value-to-Book Ratio 3.2.3. Value-to-Sales Ratio 4. Financial Options 4.1. Equity Calls and Puts 4.2. Examples of Option Strategies 4.2.1. A Protective Put Strategy 4.2.2. A Straddle Example 4.2.3. A Butterfly Example 4.3. Option Valuation 4.3.1. Bounds on Option Values 4.4. Option Pricing 5. Real Options 5.1. Equity and Bond Pricing as Options on Asset 5.2. Pricing Convertible Bonds 5.3. Option to Wait 5.4. Option to Abandon 6. Fixed Income Securities 6.1. Bond Characteristics 6.2. Bond Pricing 6.2.1. Basics 6.2.2. Bond Pricing Example 6.2.3. Bond Prices at Different Times to Maturity and YTM 6.2.4. Bond Yields 6.2.5. Bond Yields on Callable Bonds 6.2.6. Credit Risk 6.3. Spot and Forward Interest Rates 6.3.1. The Yield Curve 6.4. Term Structure of Interest Rates 6.4.1. Expectations Hypothesis 6.4.2. Liquidity Preference 6.4.3. Market Segmentation 6.4.4. Preferred Habitat Theories 6.4.5. Interpreting the Term Structure 6.4.6. Measuring the Term Structure 6.4.7. More Bonds than Time Periods 6.5. Fixed Income Arbitrage