CFA Lv2 公金 思维导图 习题

这是一篇关于CFA Lv2 公金的思维导图，主要内容包括：M4 corporate restructuring，M3 Cost of Capital: Advance Topics，M2 ESG Consideration in Investment Analysis，M1 Analysis of Dividends and Share Repurchas。

CFA Lv2 公金

• M1 Analysis of Dividends and Share Repurchases
  • 股利类型和影响
    • Forms
      • Cash dividend
        • Regular
        • Extra/special
        • Liquidating
      • Stock dividend
      • Stock split
        • 例题
          • If a company’s common shares trade at very low prices, that company would be most likely to consider the use of a: A. stock split. B. stock dividend. C. reverse stock split.
            • 答案：C 解析：C is correct. A reverse stock split would increase the price per share of the stock to a higher, more marketable range that could possibly increase the number of investors who would consider buying the stock
              • 送分题
        • 例题
          • In a recent presentation, David made two statements about dividends: Statement 1 "A stock dividend will increase share price on the ex-dividend date, all other things being equal." Statement 2 "One practical concern with a stock split is that it will reduce the company's price-to-earnings ratio." Are David's two statements about the effects of the stock dividend and stock split correct? A. No for both statements. B. Yes for Statement 1, and no for Statement 2. C. No for Statement 1, and yes for Statement 2
            • 答案：A 解析：A is correct. Both statements are incorrect. A stock dividend will decrease the price per share, all other things being equal. A stock split will reduce the price and earnings per share proportionately, leaving the price-to-earnings ratio the same.
              • 蛋糕就那么大，股数多了，就会摊薄
    • Effects
      • 别死记硬背了，考到就现推吧，阿弥陀佛
      • 例题
        • Whiteman notes that Durable Housing's board recently approved a 5% stock dividend to be paid in the next four weeks. He assesses the potential impact of this corporate action on different financial metrics. Durable Housing's corporate action will most likely result in a lower: A. P/E ratio B. debt-to-equity ratio C. share price volatility
          • A.Incorrect because a stock dividend does not alter the company's earnings. The total market capitalization is not impacted by the stock dividend because the decrease in share price is exactly offset by the increase in the number of shares outstanding. B.Incorrect because stock dividends do not impact leverage ratios such as debt-to-equity ratio. Although the retained earnings are reduced by the value of stock dividends paid (number of shares x price issued), contributed capital increases by the same amount. As a result shareholders' equity does not change. C.Correct because a stock dividend implies that more shares are issued and therefore the number of shares floating increases. This will improve liquidity and decrease hare price volatility.
            • C的结论要留意下，原理是股票股利会增加股份数，所以会增加流动性，进而导致波动的降低
      • 例题
        • Larsen considers four possible options in addition to the regular dividend to return a portion of this additional capital to shareholders in the current year: ■ Option 1: Issue a stock dividend of 20% For FMI, Option 1 would most likely: A. affect its capital structure. B. reduce the volatility of its share price. C. increase the value of each shareholder's ownership position in the company.
          • B is correct A. Incorrect because from a company's perspective, the key difference between a stock dividend and a cash dividend is that a cash dividend affects a company's capital structure, whereas a stock dividend has no economic impact on a company. B. Correct because the payment of a stock dividend also helps increase the stock's float, which improves the liquidity of the shares and dampens share price volatility. C. Incorrect because a stock dividend does not change the value of each shareholder's ownership position because the increase in the number of shares held is accompanied by an offsetting decrease in earnings per share, and other measures of value per share, resulting from the greater number of shares outstanding.
            • 这里的推导逻辑是，给股票股利，股票数量增加，流动性就增加，波动就变小
    • 对价值影响
      • 无关
        • MM
      • 有关
        • 一鸟在手
        • 税
          • 资本利得和红利税的税点不同
        • 信息传递
          • 舍不得孩子套不住狼
        • Agency costs
          • 分红->减少FCF->减少代理成本
    • 影响股利的因素
      • 税
        • double taxation
          • Effective tax rate = 1 - (1-T(corporate)) * (1-T(dividend))
        • Dividend imputation tax
          • Effective tax rate = shareholder tax rate
        • Spli-rate tax
          • 分红可以享受低税率优惠
      • 其他
        • 凭感觉蒙吧，你能行
    • payout policies
      • stable dividend policy
        • Expected Div. = Previous Div. + (Expected earnings * Target payout ratio - Previous Div.) * Adjustment factor
          • Adjustment factor = 1/N
            • N：差额调整年限
        • 例题
          • The dividend policy of Golden Gardens Inc. can be represented by a gradual adjustment to a target dividend payout ratio. Last year Golden had earnings per share of US$3.00 and paid a dividend of US$0.60 a share. This year it estimates earnings per share will be US$4.00. Find its dividend per share for this year if it has a 25% target payout ratio and uses a five-year period to adjust its dividend. A. US$0.68. B. US$0.80. C. US$0.85.
            • 答案：A 解析：A is correct. The estimated dividend per share is US$0.68. Previous DPS = US$0.60 Expected EPS = US$4 Target payout ratio = 0.25 Five-year adjustment factor = 1/5 = 0.2 Expected dividend = Previous dividend + (Expected earnings × Target payout ratio− Previous dividend) × Adjustment factor = US$0.60 + [(US$4.00 × 0.25 − US$0.60) × 0.2] = US$0.60 + US$0.08 = US$0.68
              • 核心考点，必须熟练掌握！
      • constant dividend payout ratio policy
        • 固定%
        • 例题
          • To evaluate the sustainability of Antelope's competitors' dividends, Morse conducts an industry-wide analysis that takes into account all returns of capital to shareholders. He references specific analyst projections (in $ millions) for Antelope's peers for the current year, which are presented in Exhibit 1. Based on Morse's analysis, which of Antelope's competitors has the least sustainable dividend? A. Competitor X B. Competitor Y C. Competitor Z
            • C is correct FCFE coverage ratio = FCFE/(dividends + share repurchases) Competitor X: 964/(334+182)=1.8682 Competitor Y: 1231/(786+267)=1.1690 Competitor Z: 1401/(1123+279)=0.9993
              • 注意题目问的是dividend，但是应该算FCFE/(dividends + share repurchases)，而不说FCFE/dividends。
        • 例题
          • Cool Auto has been consistently increasing dividends for the past 10 years. The Board has decided to switch to a constant dividend starting next year. To understand this change in dividend policy, Whiteman reviews three disclosures in the audited financial report. ■ Disclosure 1: The Board expects below market level flotation costs for new equity should it be issued. This is due to the long-term relationship with the existing underwriter of Cool Auto's corporate bonds, which can also act as an equity underwriter. ■ Disclosure 2: The Board does not expect any medium term new investment opportunities. ■ Disclosure 3: The Board expects, in the short to medium term, increased earnings volatility. Cool Auto Board's decision to change the dividend policy is most likely supported by: A. Disclosure 1 B. Disclosure 2 C. Disclosure 3
            • C is correct A.Incorrect because lower flotation costs would encourage the company to issue new equity rather than use own internally generated funds to finance operations. With lower flotation costs, companies can pay higher dividends as new equity is cheap to issue. This sustains increasing dividends rather than constant payout ratio approach. B.Incorrect because companies with (profitable) investment opportunities will tend to pay less in dividends than companies with fewer investment opportunities because the former companies will have more uses for internally generated cash flows. Therefore, no new investment opportunities sustain increasing dividends rather than constant payout ratio approach. C.Correct because high volatility in future earnings sustains a switch from increasing dividends to a constant payout ratio approch. All else equal, the more volatile the earnings are the greater the risk that a given dividend increase may not be covered by earnings in a future time period. Thus in periods of higher volatility of earnings companies are usually more cautious in the size and frequency of dividends.
              • 这里要注意，之前是高股利，现在是稳定，潜台词是以后要减少股利。减少股利主要是从风险的角度考虑，觉得以后风险会高，不确定性会变大，才会减少股利，所以选C不选A。而B说的没机会，钱反而会留下了发股利。
  • 回购
    • Methods
      • Buy in open market
        • flexible
        • no legal obligation
      • tendor offer
        • Fixed price
        • Auction
      • Direct negotiation
        • normal premium
        • But could discount
    • Effect
      • EPS
        • 掏口袋
          • EPS
        • 借钱
          • Earning yields > after-tax cost of debt
            • EPS
        • 例题
          • Sarah believes that looking at other companies that have completed share repurchases could be helpful to John's analysis. She looks at the history of ABC Inc. ("ABC"), a US-based e-commerce company whose business depends heavily on the retail sector. ABC made its first share repurchase in early 2017 using surplus cash. ABC's selected financial information just prior to the repurchase is shown in Exhibit 2. Exhibit 2 ABC, Inc. Selected Financial Information as of Year-End 2016 Net income: $124 million EPS: $1.24 Shares outstanding: 100 million Details of share repurchase Cash available for repurchase: $836 million Share price at time of repurchase: $38.00 Premium over current share price for repurchase: 10.0% If ABC had used all of its surplus cash to repurchase its shares, based on Exhibit 2, the percentage increase in EPS would have been closest to: A. 10%. B. 28%. C. 25%.
            • C is correct EPS: $1.24 Surplus cash available for repurchase: $836 million # shares outstanding before repurchase: 100 million Share price at time of repurchase: $38.00 Price premium for repurchase: 10% Repurchase price per share: $38.00 × 110%=$41.80 # shares repurchased: $836 million ÷ $41.80 per share=20 million # shares outstanding after repurchase: 100 million – 20 million=80 million EPS after the repurchase: $124 million ÷ 80 million shares=$1.55 % increase in EPS: ($1.55 – $1.24) ÷ $1.24 = 25%
              • 要注意38是市场价格，回购价格要再额外加10%的溢价。
        • 例题
          • A company has 1 million shares outstanding and earnings are £2 million. The company decides to use £10 million in surplus cash to repurchase shares in the open market. The company's shares are trading at £50 per share. If the company uses the entire £10 million of surplus cash to repurchase shares at the market price, the company's earnings per share will be closest to: A. £2.00. B. £2.30. C. £2.50.
            • 答案：C 解析：C is correct. At the current market price, the company can repurchase 200,000 shares (£10 million/£50 = 200,000 shares). The company would have 800,000 shares outstanding after the repurchase (1 million shares − 200,000 shares = 800,000 shares). EPS before the buyback is £2.00 (£2 million/1 million shares = £2.00). Total earn ings after the buyback are the same because the company uses surplus (nonearn ing) cash to purchase the shares, but the number of shares outstanding is reduced to 800,000. EPS increases to £2.50 (£2 million/ 800,000 shares = £2.50).
              • 送分题
      • BVPS
        • Repurchase price < original BVPS
          • BVPS
  • 对比
    • 相同税率，dividend和repurchase没区别
    • Adv. of repurchase
      • potential tax advantages
      • signal
      • flexibility
      • offset dilution
      • increase leverage
    • Analysis of dividend
      • Dividend payout ratio
        • Dividends/NI
      • Dividend coverage ratio
        • NI/Dividends
      • FCFE coverage ratio
        • FCFE/(Dividends+Shares repurchases)
    • 例题
      • Morse asks his colleague, Sarah, to investigate whether Antelope might use its surplus cash for a share repurchase rather than for dividends. Sarah, a senior analyst, comments that share repurchases can be beneficial for several reasons: Statement 1 The distribution of cash among shareholders is equivalent to what would have otherwise been distributed to them as dividends. Statement 2 Share repurchases provide greater flexibility to management than the payment of cash dividends. Statement 3 When directly negotiated, share repurchases can be used to purchase stock for less than the current market price. Which of Sarah’s statements to John about share repurchases is least accurate? A. Statement 2 B. Statement 1 C. Statement 3
        • C is correct Statement 1 is least accurate. Although the amount of cash distributed is the same, only those shareholders who have their shares purchased by the company will receive any cash.
          • 发股利是雨露均沾，但是回购只有部分人吃的到
          • 回购的时候谈判，价格可能高，也可能低，不一定
• M2 ESG Consideration in Investment Analysis
  • 公司治理
    • 所有权和投票权
      • Ownership
        • Horizontal
          • 交叉持股10%
        • Vertical
          • A控股B，B控股CDEF
            • 例题
              • Which of the following statements is incorrect? A. Horizontal ownership will help to promote the strategic alliance and promote a long-term relationship between the companies. B. Vertical ownership is also called pyramid ownership. C. Pyramid ownership grants one share class superior or even sole voting rights, whereas the other share class has inferior or no voting rights.
                • 答案:C 双重股权结构授予一种股票类别优先投票权或单独投票权，而另一种股票类别较低的投票权或没有投票权。选项C描述错误，符合题意，为正确选项。对于选项 A，横向所有权涉及具有共同商业利益的公司(例如客户或供应商)，公司彼此之间有交叉持股安排。这种结构有助于促进战略联盟，并促进这些公司之间的长期关系。该选项描述正确，不符合题意，为错误选项。对于选项 8，垂直所有权也被称为金字塔所有权。该选项描述正确，不符合题意，为错误选项。
                  • C是双重持股。Vertical ownership是股权穿透。
        • Dispersed
          • 无控股，大部分1%以下
        • Concentrated
          • 有个控股
        • 例题
          • The board of directors of QC Technology, Inc. (QCT), a publicly-traded manufacturer of semiconductors and electronics, hires an advisory team to complete an external review of the board's performance. Alex Quinn, an analyst on the external advisory team, summarizes QCT's current structure in Exhibit 1. Quinn notes that two directors are executives of significant QCT suppliers and each holds 10% of QCT's shares. QCT maintains a similar ownership stake in each supplier. QCT's founder, who is the largest QCT shareholder, also sits on the board of directors for each supplier. QCT's current company ownership structure is best described as: A. vertical. B. dispersed. C. horizontal.
            • 正确答案：C A.Incorrect because vertical (or pyramid) ownership involves a company or group that has a controlling interest in two or more holding companies, which in turn have controlling interests in various operating companies. The relationship with the two significant QCT suppliers that each maintain 10% ownership and board representation and QCT's ownership in the suppliers reflect a horizontal ownership structure. B.Incorrect because dispersed ownership reflects the existence of many shareholders, none of which has the ability to individually exercise control over the corporation. The relationship with the two significant QCT suppliers that each maintain 10% ownership and board representation and QCT's ownership in the suppliers reflect a horizontal ownership structure. As outlined in Exhibit 1, the largest shareholder owns 40% in addition to the 20% supplier stake indicate a concentrated ownership. Concentrated ownerships reflects an individual shareholder or a group (called controlling shareholders) with the ability to exercise control over the corporation. & In this context, a group is typically a family, another company (or companies), or a sovereign entity. C.Correct because horizontal ownership involves companies with mutual business interests (e.g., key customers or suppliers) that have cross-holding share arrangements with each other. The relationship with the two significant QCT suppliers that each maintain 10% ownership and board representation and QCT's ownership in the suppliers reflect a horizontal ownership structure.
              • 送分题
      • Ownership + voting power
        • Dipersed ownership + Dispersed voting power
          • Principal-agent problem
            • 普通公司，强经理人，弱股东
        • Dipersed onwership + Concentrated voting power
          • Principal-Principal problem
            • Dual-class shares
            • Pyramid structure
            • 例题
              • Emily Marker; CFA, is a fixed-income analyst for the Namsan Funds. Her supervisor asks her to identify ESG factors and value the corporate bonds of BR Hotels, a publicly traded boutique hotel company. Marker notes that BR Hotels is a "green hotel" company that prioritizes sustainability and has successfully reduced water and energy usage at its hotels. The founding family owns 55% of the outstanding shares. Each ownership share has equivalent voting rights.The board of directors of BR Hotels consists of 15 members, with independent CEO and chairperson roles. The board includes one independent member and two women, and 20% of the board members have experience in the hotel industry. The potential conflict between or among shareholders and managers of BR Hotels can best be described as: A. voting caps. B. a principal-agent problem. C. a principal-principal problem.
                • C is correct BR Hotels has concentrated ownership, given that the family owns 55% of theshares, lt also has concentrated voting power, since each ownership share has equal voting rights.In this ownership structure, the controlling shareholders have power over both management andminority shareholders. The controlling shareholders are referred to as strong shareholders andthe managers as weak managers. The conflict in this structure exists between the controllingshareholders and the minority shareholders. The controlling shareholders can potentially divertresources for their own benefit at the expense of the minority shareholders. This conflict isreferred to as a principal-principal problem. A is incorrect since the conflict for BR Hotels is a principal-principal problem. Voting caps are legalrestrictions on the voting rights of large share positions. They result from an ownership structureof concentrated ownership and dispersed voting rights. B is incorrect since the conflict for BR Hotels is a principal-principal problem. The principalagentproblem occurs when the ownership structure has dispersed ownership and dispersed votingrights. In this case, the structure has weak shareholders and strong management, with apotentially significant conflict between the shareholders and the management.
                  • 控制和投票双集中，主要冲突是大小股东
        • Concentrated ownership + Dispersed voting power
          • voting cap
        • Conventrated ownership + Concentrated voting power
          • Principal-principal problem
            • 控股股东和少数股东之间问题
        • 例题
          • After the discussion, Quinn considers a fourth recommendation to reduce the risk premium by assessing the potential benefits of completing a public disclosure that confirms that all independent directors will be approved by the entire shareholder base and the non-controlling shareholders going forward. The public disclosure that Quinn considers for the fourth recommendation is best described as: A. a stewardship code B. shareholder activism C. a special voting arrangement
            • 答案解析： A.Incorrect because many countries have introduced voluntary (and, in some instances, involuntary) codes, known as stewardship codes, that encourage investors to exercise their legal rights and increase their level of engagement in corporate governance. In this example, the pro-active disclosure is related to a special voting arrangement to protect minority shareholders in confirming independent directors on the board. B.Incorrect because shareholder activism refers to strategies used by shareholders to attempt to compel a company to act in a desired manner. In this example, the pro-active disclosure is related to a special voting arrangement to protect minority shareholders in confirming independent directors on the board. C.Correct because a special voting arrangements is a requirement designed to improve the position of minority shareholders. In this example, the pro-active disclosure is related to a special voting arrangement to protect minority shareholders in confirming independent directors on the board.
              • A是利好投资者，来建立监管守则保障投资者
              • B是利好激进股东，本来股东不参与公司经营，但是通过增加持股，对公司干预
              • C是利好少数股东，有些特别的投票安排
      • Special shareholders
        • Families
          • Adv.
            • low principal-agent problem
          • Disadv.
            • transparency
            • management accountability
            • minority shareholder rights
            • quality talent
        • State-owned enterprises
          • mixed-ownership
          • lower market scruntiny
          • state guarantee
          • consider social/public
    • 董事会
      • board structures
        • one-tier & two-tier
          • 两者无优劣之分
        • CEO duality
          • bad signal
      • Time
        • Long tenure: >10 yrs
          • adv
            • know company
          • disavd
            • less subjective
            • refuse changes
          • 例题
            • Reading the company's ESG disclosures, Whiteman reviews three observations and concludes that the company's corporate governance practices need further improvement. ■ Observation 1: The Board is chaired by an independent director and is composed of seven experienced members, with diverse gender and age characteristics. Four members with experience in the real estate sector have been on the board for the past 15 years. Due to their experience they were recently appointed as advisors to the CEO. ■ Observation 2:The Board has a nomination committee consisting of five independent members. Decisions are made with a simple majority of votes. ■ Observation 3: The ratio between the CEO's pay and the average worker is above the market level. The company has a "say on pay" provision where shareholders vote on management compensation. In addition, a claw-back policy allows the company to recover previously paid salaries subject to defined key performance indicators. Whiteman's conclusion regarding Durable Housing's corporate governance practices is best supported by: A. Observation 1 B. Observation 2 C. Observation 3
              • A is correct A.Correct because the long tenure of members violates effective corporate governance practices. The ESG reading mentions that a board member tenure is considered long if it exceeds 10 years. Long tenure may affect the independence of board members or may result in directors being less willing to embrace changes in the corporation's business. In addition four board members were recently appointed as advisors to the CEO. These members are no longer considered independent. B.Incorrect because the nomination committee is totally independent which is a sign of good corporate governance. Board Committees: "When evaluating a company’s board committees, investors assess whether there are sufficiently independent committees that focus on key governance concerns, such as audit, compensation, and the selection of directors. The presence of non-independent committee members or executive directors may prompt the consideration of potential conflicts of interest or biases, such as those relating to compensation decisions (remuneration committee), management selection (nomination committee), and the integrity of financial reporting (audit committee)" C.Incorrect because although the CEO's salary compared with the average worker is above the market level, the shareholders have a say on pay provision which allows them to vote on the remuneration of the CEO. In addition the company has a claw back clause which allows salaries to be paid back if no performance has been proven.
                • 注意***超过10年不是一个好的信号。并且下面的board member如果是chairman或者director提名/指派/负责，就不算独立。
    • 高管
      • say on pay
        • 股东投票决定
  • ESG
    • ESG integration
      • 凭感觉去蒙吧，少年，你可以的
      • 例题
        • The board of directors of QC Technology, Inc. (QCT), a publicly-traded manufacturer of semiconductors and electronics, hires an advisory team to complete an external review of the board's performance. In discussions with QCT's management team, Quinn learns that 35% of QCT's term debt is scheduled to be redeemed in two years and that the bondholder is not planning to renew. This bondholder provides QCT and Quinn with a copy of an ESG assessment report that they had completed within the last two months. Also, the management team indicates that QCT plans to implement initiatives to change their business model as part of their 5-year strategic planning including efforts to improve on-going sustainability. Initiative 1: Expand into the manufacturing of graphics processors the following year. Initiative 2: Begin to convert existing manufacturing plants to renewable energy sources after three years. Initiative 3: Adopt new and more stringent supply chain and sourcing standards for raw materials the following year. As Quinn prepares a proprietary 5-year ESG assessment on QCT, he validates that once the new plants outlined in Initiative 2 are fully operational, QCT anticipates an 1% to 2% increase in their manufacturing energy costs which is expected to be offset by an improved competitive position resulting from the emissions reduction versus their non-renewable energy competitors. The initiative that would have the highest level of materiality in the ESG assessment provided to QCT and Quinn would be: A. Initiative 1 B. Initiative 2 C. Initiative 3
          • 正确答案：C A.Incorrect because in fixed-income analysis, the integration of ESG is generally focused on mitigating downside risk until redemption or maturity of the investment (i.e., bond). The expansion into a new market would be considered a growth opportunity completed as part of an equity analysis of ESG. B.Incorrect because the conversion of the existing manufacturing plans to renewable energy sources would be outside of the investment time horizon for the bondholder (term debt lender) as the bond is scheduled to be redeemed prior the new plants being completed. C.Correct because for the ESG assessment, the adoption of more stringent sourcing standards for raw materials would be considered an Environmental category topic, have sufficient material impact on QCT's supply chain, and be within the investment time horizon for the term debt lender.
            • 这里说的是债券，不是股票。债券关注下行风险，股票关注潜在机会。A是潜在机会，所以不选。
            • B说3年后开始，题目说2年内会赎回，并且不续期。所以B没影响。不能选。
            • QCT是semiconductors and electronics公司，5年内要改变战略模式，包括3年后向和再生能源转变，可以认为QCT是能源行业。对能源行业来说，ESG中的E很重要。选项C是环境因素，会造成实质影响。
      • 例题
        • Koppal hires an ESG consultant, which recommends that the company improve its reporting of relevant ESG factors and disclose how ESG risks are managed. Koppal considers various approaches to identify ESG factors and chooses the Sustainability Accounting Standards Board's (SASB) Materiality Map. Koppal's chosen approach to identify ESG factors is most likely using: A. an internal proprietary method. B. ratings and analysis from ESG data providers. C. not-for-profit initiatives and reporting frameworks.
          • C is correct A.Incorrect because Koppal is not using proprietary methods such as their own judgement or the firm's proprietary tools to identify ESG information by researching companies, news reports, industry associations. Instead, Koppal is attempting to identify relevant factors to disclose and is relying on the standards of the SASB Materiality Map to do so. B.Incorrect because ratings and analysis from ESG data providers involves the use of information supplied by an ESG data provider (vendor), such as MSCI or Sustainalytics. In this case, Koppal is using a reporting framework rather than an an ESG data provider on publicly available corporate ESG disclosures. C.Correct because Koppal is attempting to identify relevant factors to disclose and is relying on the standards of the SASB Materiality Map to do so. This approach in identifying ESG factors involves the consideration of not-for-profit initiatives and sustainability reporting frameworks that provide data and insights on ESG issues.The SASB seeks to promote uniform accounting standards for sustainability reporting. In doing so, it has developed the SASB Materiality Map, which lists relevant ESG-related, sector-specific factors that the organization and industry working groups deem to be material.
            • B一般是MSCI，然后SASB是非盈利。这个有点偏，需要你常识足够好。
      • 例题
        • BR Hotels has historically had a high labor turnover rate. Most of its workforce are paid at or near the minimum wage, and the company offers no health benefits. Marker and her supervisor discuss how BR Hotels will be affected by the expected passage of legislation raising the minimum wage and growing pressure to offer benefits. Marker integrates ESG factors in the investment valuation of BR Hotels' corporate bonds. The security analysis of BR Hotels is most likely focused on: A. mitigating downside risk. B. adjusting the discount rate. C. identifying potential opportunities.
          • A is correct The implementation of ESG factors in security analysis differs for equity analysisand fixed-income analysis. For BK Hotels' corporate bonds, the focus of EsG integration is on mitigating downside risk, in contrast, in equity analysis, EsG integration is used to both identify potential opportunities and mitigate downside risk. B is incorrect since adjusting the discount rate is typically used in equity analysis and not infixed-income analysis, ln valuing a stock, an analyst may choose to adjust the discount factor toaccount for the EsG risk. in fixed-income analysis, the credit spread or cDs is adjusted to reflectthe EsG risk. C is incorrect since identifying potential opportunities is used in equity analysis and not infixed-income analysis, in fixed-income analysis, the focus of EsG integration is on mitigatingdownside risk. in equity analysis, EsG integration is used to both identify potential opportunitiesand mitigate downside risk.
            • 债券只考虑能不能收到现金流，所以只考虑降低风险。 股票除了考虑风险，也会考虑回报。 ESG integration一般不调整discount rate。但是估值的话会考虑。
      • 例题
        • Zhang points out that Golden's steel production is energy intensive and relies on coal in producing its main product, stainless steel. The firm's major customers are oil and gas firms using stainless steel in their drilling operations. Most of Golden's steel capacity is located in developing economies, where it currently faces few environmental regulations. Golden has a 10-member board with a chairperson and 5 independent members. The chairperson is not the CEO, and the board is diverse, with 6 women. The company has an excellent record on employee health and safety. The most relevant industry risk factors affecting Golden are: A. social. B. governance. C. environmental.
          • 答案：C 解析：C is correct. In identifying a company’s ESG risks and opportunities, an analyst must determine which ESG factors are relevant to its industry. Industries such as energy and steel are typically more impacted by environmental factors. This is clearly the case with Golden. Golden’s steel production is energy intensive and relies on coal in producing its main product, stainless steel. Its major customers are oil and natural gas companies, and most of its steel capacity is located in developing economies, where it currently faces few environmental regulations. Changes in such regulations and projected declining demand for its main product are major risk factors for the firm. B is incorrect because social factors are typically not the most important industry-related ESG risk factors for steel companies. Employee health and safety is a material social factor for this company. This is not a risk since the company has an excellent record on employee health and safety. C is incorrect because governance factors are not a major risk for Golden. Golden’s board comprises 10 members, of whom 5 are independent. In addition, the board has gender diversity and no CEO duality, since the chairperson is not the CEO.
            • 送分题
      • 例题
        • In a discussion with Anna about ESG factors in investment analysis, Zhang makes the following statements: Statement 1 Material ESG information used in investment analysis is best obtained from the individual companies. Statement 2 The level of disclosure varies among companies because these disclosures are voluntary. Statement 3 The time horizon has little effect on the materiality of the underlying ESG factors. Which of the statements made by Zhang on ESG factors in investment analysis is correct? A. Statement 1 B. Statement 2 C. Statement 3
          • 答案：B 解析：B is correct. Statement 2 is correct because the level of disclosure varies consider ably among companies since ESG-related disclosures are voluntary. This creates a comparability issue for analysts. This is a problem associated with the proprietary methods used to identify company and industry ESG factors. A is incorrect because Statement 1 is incorrect. The problems in doing ESG investment analysis based on company information are that the reporting of this information is inconsistent and that disclosures vary among companies. C is incorrect because Statement 3 is incorrect. The time horizon is an important factor affecting the materiality of the underlying ESG factors. Some ESG issues may affect a company's performance in the short term, whereas other issues may be more relevant in the long term. This is especially true in credit analysis because of the different maturities of the bonds.
            • 目前ESG没有统一标准，所以各个公司自说自话，公司提供的信息，都不太靠谱。A是错的，B是对的。 时间对ESG很重要，可以看下美国的案例，前面那个总统规定AM一堆要考虑ESG，否则违法，后面的总统上台，规定就改成AM不能考虑ESG，否则违法，关键是还能左右横跳好几次，现在还在跳。所以具体情况一定要看当时的时间背景。
      • 例题
        • Zhang integrates ESG factors into the equity valuation of Golden. He believes the company faces significant long-term risk due to regulatory changes regarding greenhouse gas emissions in the developing economies. These changes will have a negative impact on Golden's steel capacity and its production costs. Based on long-term forecasts from the International Energy Agency (IEA), Zhang expects oil and natural gas demand to decline over the next decade, reducing oil company capital expenditures on exploration and drilling. He uses a discounted cash flow model to value Golden stock.
          • Zhang's ESG integration approach is likely to impact equity valuation by: A. increasing revenues. B. raising the discount rate. C. reducing operating costs.
            • 答案：B 解析：B is correct. Golden faces significant long-term environmental risk factors. The imposition of stricter regulation on greenhouse gas emissions in the developing countries will result in stranded assets, as much of Golden steel capacity becomes obsolete and not economically viable. Shifting away from low-cost coal usage will likely result in higher operating costs, and declining oil and natural gas demand will result in lower revenues for stainless steel. Thus Zhang should raise the discount rate for Golden to account for the higher environmental risk. A is incorrect because Golden's revenues are likely to decline as a result of the projected fall in demand for oil and natural gas. As a result, oil and natural gas companies will cut their exploration and drilling budgets and reduce their purchases of stainless steel. C is incorrect since operating costs are likely to rise as Golden shifts away from using low-cost coal to more expensive energy sources.
              • 送分题
              • ESG还是挺好蒙的，比如这题，明显这公司ESG不行，要给个差评。增加收入是好评。增加折现率就是降低价格，是差评。减少成本是好评。
          • After integrating the ESG factors into the discounted cash flow model, the equity value of Golden is likely to: A. decrease. B. remains unchanged. C. increase
            • 答案：A 解析：A is correct. The stock price for Golden is likely to decline. Golden faces significant long-term environmental risk as a result of more stringent future regulation on greenhouse gas emissions in the developing economies and a future decline in demand for its main product, stainless steel. Thus in the discount cash flow model, Golden should increase the cost of equity and most likely lower the growth rate in cash flow. Both factors will cause the price to fall. B is incorrect since the price of Golden is likely to decline and not remain unchanged. C is incorrect since the price of Golden is likely to decline and not increase.
              • 送分题
    • Green bonds
      • for green investment
      • Risk
        • greenwashing
        • liquidity
          • buy-and-hold缺乏流动性
    • Stranded assets
      • 政策，监管和其他变化，导致经济价值下降或者消失
• M3 Cost of Capital: Advance Topics
  • Capital cost analysis method
    • Top-down
      • 凭感觉去蒙吧，少年，你可以的
      • 凭感觉去蒙吧，少年，你可以的
    • Bottom-up
      • 凭感觉去蒙吧，少年，你可以的
  • Debt cost analysis
    • 凭感觉去蒙吧，少年，你可以的
  • Share cost analysis
    • ERP
      • Historical approach
        • Approachs
          • Equity index
            • 指数
          • Time period
            • Longer
              • Adv
                • 波动小
              • Disadv
                • 不代表目前市场
            • Shorter
          • Mean type
            • 算术
              • Adv
                • 容易算
              • Disadv
                • 对极值敏感
            • 几何
              • Adv
                • 降低极值影响
                • 合理估计终止
          • Risk-free rate proxy
            • T-bond
              • Adv
                • 和股票期限相近
              • Disadv
                • 再投资风险
            • T-bill
        • Limitation
          • ERPs vary over time
          • Survivorship bias
      • Forward-looking approach
        • Survey-based estimates
          • Disadv
            • Sampling and response bias
            • Behavioral bias
        • Dividend discount model estimates
          • re = D1/V0 + g
        • Macroeconomic model
          • Grinold-Kroner model
            • ERP = (DY + delta(P/E) + i + g - delta(S)) - E(rf)
              • DY: dividend yield
              • Delta(P/E): expected repricing
              • i: expected inflation
              • g: real economic growth
              • Delta(S)
                • 注意这个，在公式中是减号
            • 例题
              • For FABR, Janiak first estimates the company's equity risk premium (ERP) using the information in Exhibit 2. Using the Grinold–Kroner model, the ERP estimate for FABR Manufacturing is closest to: A. 8.2%. B. 9.0%. C. 9.8%.
                • A is correct Because ERP = [DY + Δ(P/E) + i + g + ΔS] – E(rf), where: DY is the dividend yield = 2.5% Δ(P/E) is the expected growth rate in the P/E = 1.0% i is expected inflation = 3.5% g is the expected growth rate in real EPS = 2.0% ΔS is the change in shares outstanding = 0.0% E(rf) is the risk-free rate = 0.8% ERP = [2.5% + 1% + 3.5% + 2% + 0%] – 0.8% = 8.2% B. Incorrect because E(rf) is excluded from the ERP calculation. Where ERP = [DY + Δ(P/E) + i + g + ΔS] = [2.5% + 1% + 3.5% + 2% + 0%] = 9.0% C. Incorrect because E(rf) is added instead of subtracted in the ERP calculation. ERP = [DY + Δ(P/E) + i + g + ΔS] + E(rf) = [2.5% + 1% + 3.5% + 2% + 0%] + 0.8% = 9.8%
                  • 这个公式很复杂，不过因为公式复杂，所以考试的时候，大概率不会给你没用的信息干扰你，基本把所有的数按符号加总就可以
                  • 要注意ERP是risk premium，所以最后需要减去rf，一般rf是有小数点的，可以也可以从小数点后的数值，做快速判断
            • 例题
              • An equity index is established in Year 1 for a country that has recently moved to a market economy. The index vendor constructed returns for the four years prior to Year 1 based on the initial group of companies constituting the index in Year 1. From Year 12 to Year 16, a series of military confrontations concerning a disputed border disrupted the economy and financial markets. The dispute is conclusively arbitrated at the end of Year 16. In total, 20 years of equity market return history is available. Other selected data are in the following tables. An estimate of the ERP consistent with the Grinold-Kroner model is closest to: A. 2.7%. B. 3.0%. C. 4.3%
                • B is correct. i= 4% per year (long-term forecast of inflation) g=4% per year (growth in real GDP) Δ (P/E0 = 1% per year (growth in market P/E) dy = 1% per year(dividend yield or the income portion) Risk-free return=rf= 796 per year (for 10-year maturities)Using the Grinold-kroner model, the ERp estimate isERP={1.0+1.0 +[4.0+4.0+0.0)]}-7.0=3.0%. The premium of 3.0% compensates investors for average market risk, given expectations forinflation, real earnings growth, P/'E growth, and anticipated income.
                  • 公式打死猪(DSPIG)，注意算出来的是总回报，包含了Rf.
            • 例题
              • An equity index is established in Year 1 for a country that has recently moved to a market economy. The index vendor constructed returns for the four years prior to Year 1 based on the initial group of companies constituting the index in Year 1. From Year 12 to Year 16, a series of military confrontations concerning a disputed border disrupted the economy and financial markets. The dispute is conclusively arbitrated at the end of Year 16. In total, 20 years of equity market return history is available. Other selected data are in the following tables. Common stock issues in the aforementioned market with average systematic risk are most likely to have required rates of return of: A. between 2% and 7%. B. between 7% and 9%. C. 9% or greater
                • 套公式re = rf + beta * ERP。yield curve有2个，取long term作为rf，即7%。题目说average systematic risk，所以beta=1。最后只需要求ERP。 题目给historical data，取几何平均值做ERP，即2%，得到ERP(Historical) = 2%。 继续求ERP(GKM)，套公式ERP=(DY+g+inf+delta(P/E)-delta(S))-rf。带入参数ERP(GKM)=(0.01+0.04+0.04+0.01-0)-0.07=0.03=3%。 最后实际的ERP应该在ERP(Historical)和ERP(GKM)之间，所以0.02<ERP<0.03。所以0.09<re<0.1。选C。
                • 【PS1】GKM公式必须熟练掌握。其中g为real GDP growth。
                • 【PS2】几个均值的对比：中位数Mediam：减少极大值和极小值的影响。调和Har：减少极大值的影响。几何Geo：区间复利。算数Ari：计算简单。四者没有决定优劣，看题目想解决什么问题。
                • 【PS3】历史数据可以计算过去的ERP，GKM可以计算未来的ERP。一般ERP在这2者之间。
                • 【PS4】找rf优先找长期国库债。其他预期，比如通胀，也优先找长期。
                • 【PS4 Pro】长期通胀找不到，可以用YTM(t-bonds)-YTM(TIPS)代替。
          • Disadv
            • modeling errors
            • behavioral bias
    • calculation
      • Approach
        • DDM
          • GGM
            • Re = D1/P0 + g
              • 例题
                • Consider a company that currently pays a dividend of USD2.50. The current price of the stock is USD50, and the dividend is expected to grow at a rate of 5% per year into perpetuity. Using the DDM, determine the following: What is the company’s required rate of return on equity? A. 9.25% B. 10.25% C. 11.25%
                  • B is correct. re = 2.5*1.05/50+0.05=0.1025
                    • 其实记不住公式也没关系，V=D1/(r-g)，用这个解方程也行。
          • 例题
            • To estimate Manika's new cost of equity after the acquisition, Pascua considers using the DDM, the global CAPM, or the Grinold–Kroner model. She assesses which model is the most appropriate to use on the basis that Manika has been paying consistent but very low dividends. Both Manika and Barkada operate in a developing country where the stock market is not a large portion of the economy. Which model is most appropriate for estimating Manika’s new cost of equity? A. DDM B. Global CAPM C.Grinold–Kroner model
              • 正确答案：A A.Correct because the DDM only requires that the company’s shares be publicly traded and that the company pays dividends that are stable and predictable. Those conditions are met by Manika. First, it is a public company as implied by the phrase based on the unaffected share price prior to the agreement in the vignette. Second, it pays consistent dividends. Very low dividends will simply translate to a low cost of equity based on the DDM. B.Incorrect because in the global CAPM (GCAPM), where a global market index is the single factor, there are no assumed significant risk differences across countries. The issue is that a likely result is a low, or even negative, slope coefficient because of the correlation between emerging and developed market returns being quite low in general. If the company’s operations are global, but limited to developed countries, the GCAPM and ICAPM are reasonable methods to apply. If however, the company’s operations extend to developing countries, the methodology is less clear. Both Manika and Barkada operate in a developing country where the stock market is not a large portion of the economy. Hence, the Global CAMP is not appropriate. C.Incorrect because the Grinold-Kroner model is not appropriate for estimating the ERP in a developing country where the stock market is not a sufficiently large portion of the economy. ERP estimates derived from macroeconomic models such as the Grinold–Kroner model, rely on a number of forecasted economic variables such as inflation and expected growth in real earnings per share. Using relationships between macroeconomic and financial variables in equity valuation models, analysts can develop ERP estimates. These models might be more reliable when public equities represent a relatively large share of the economy, as in many developed markets.
                • DDM的前提是1. 上市公司，2.分红稳定，这里都符合
                • Global CAPM的前提是风险没有显著的不同，但是这里说发展中国家，所以差异比较大
                • GK model的前提是股票市场占的比重比较大，但是这里提到是发展中国家，所以不适用
        • Bond yield plus risk premium approach
          • Re = Rd + RP
        • Risk-based models
          • Re = compensation for time value of money + compensation for bearing risk
          • CAPM
            • Re = Rf + beta * ERP
          • Fama-French model
            • 3 factors
              • Re = Rf + B1 * ERP + B2 * SMB + B3 * HML
              • 例题
                • An analyst is estimating the required return on equity for a company and has gathered the following information: What is the difference between reguired rate of returns based on the Fama-French model and CAPM? A.1.65% B.1.73% C.1.82%
                  • A is correct. For CAPM: re = 0.06+0.8*(0.1-0.06)=0.092 For FF: re = 0.06+0.01+0.75*(0.1-0.06)+0.15*0.05+0.05*0.02=0.1085 0.1085-0.092=0.0165
                    • 这题相当于一道题考了2个知识点，出的挺好的。
            • 5 factors
              • Re = Rf + B1 * ERP + B2 * SMB + B3 * HML + B4 * RMW + B5 * CMA
              • 例题
                • Riaz is an equity analyst at Saturn Investments. Recently he estimates the required return for a company by using the Fama-French models. He collected the following data: Assuming that the risk-free rate is 4%,the cost of equity is: Factor | Estimated Beta | Risk Premium Market | 1.2 | 7% Size (SMB) | 0.1 | 3% Value (HML) | 0.3 | 2% Profitability (RMW) | 0.2 | 2.5% Style (CMA) | 0.4 | 5% A. 15.8%. B. 12.40%. C. 12.43%.
                  • 套用Fama-French 五因子模型：r(e) = 0.04+0.07*1.2+0.03*0.1+0.02*0.3+0.025*0.2+0.05*0.4=0.158=15.8%，选A。
                  • 【PS1】Cost of equity / required return on equity公式： 1. Public company 1.1. DDM: r(e)=D1/P0 + g 1.2. BY+RP: r(e)=r(d) + RP 1.3. Risk-based model: r(e) = TVM + RP 1.3.1. CAPM: r(e) = r(f) + beta * ERP 1.3.2. FFM: 1.3.2.1 3-factor: r(e) = r(f) + beta(1) * ERP + beta(2) * SMB + beta(3) * HML 1.3.2.2 5-factor: r(e) = r(f) + beta(1) * ERP + beta(2) * SMB + beta(3) * HML + beta(4) * RMW + beta(5) * CMA 2. Private company (corporate issuer) 2.1. Expanded CAPM (CI): r(e) = r(f) + beta * ERP + SP + IP + SCRP 2.2. Build-up model (CI): r(e) = r(f) + ERP + SP +SCRP
                  • 【PS2】Equity中的private company估值模型： 3. Private company (equity) 3.1. Expanded CAPM (CI): r(e) = r(f) + beta * ERP + SP + SCRP 3.2. Build-up model (CI): r(e) = r(f) + ERP + SP + IP + SCRP
                  • 【PS3】在CI和equity中，expanded和build-up的公式不一样，课后题有考equity的公式。
      • Non-public companies
        • Expanded CAPM
          • Re = Rf + B * peer(ERP) + SP + IP + SCRP
        • Build-up approach
          • Re = Rf + ERP + SP + SCRP
        • CI的这2个公式和Equity的这2个公式不一致。主要区别的CI吧IP放在了expanded。考试的时候主要看考哪个科目，决定用哪个公式。
          • 如果实在分辨不出来，就用equity的公式，不要用CI的
      • Country spread model
        • ERP = ERP for a developed market + α * country risk premium
• M4 corporate restructuring
  • Corporate actions and motivation
    • Corporate structural change
      • Investment
        • 例题
          • NALC is considering acquiring GLXY Brands (GLXY) for USD 55.1 billion. NALC operates a holding company and through its subsidiaries manufactures, markets, and distributes non-alcoholic beverages. GLXY produces and markets alcoholic beverages. Details of the transaction are provided below. ●The acquisition is expected to close at the end of the current year. ●The first year of the combined entity will be next year. ●GLXY carries USD 10.4 billion in debt on its balance sheet, and this debt will be assumed by NALC. ●The acquisition will be financed with USD 10.5 billion in new debt and USD 44.6 billion in new shares of NALC issued at USD 88 per share. ●The interest rate on the new debt is 3.7% per year. ●The effective tax rate for the combined entity is 14%. Pro forma income statements (in USD millions) for next year before acquisition for NALC Beverages and GLXY Brands are provided in Exhibit 1. NALC and GLXY currently have 529 million and 164 million common equity shares outstanding, respectively. The next-year EPS (in USD) for NALC Beverages, if it were to acquire GLXY Brands, would be closest to: A. 3.02. B. 3.34. C. 6.17.
            • A is correct Because the calculation of EPS is: NALC Beverages new debt interest expense = 10,500 × 0.037 = 388.5 ~ 389 million; when added to existing debt interest expense of 385 million, this totals 773.5 ~ 774 million. Merged amortization and depreciation expense = 61 + 299 = 360 million. Merged NALC Beverages EBT = 13,983 – 9,209 – 360 – 774 = 3,640 million. Merged NALC Beverages taxes = 0.14 × 3,640 = 509.6 million. NALC Beverages new shares issued = 44,600 / 88 = 506.8 or 507 million shares. Merged NALC Beverages EPS = 3,130 / 1,036 = 3.02.
              • 这题计算量偏大，要三分钟做出来，一定要熟练并且思路清晰。 首先EBIT前都可以合并1725+2689=4414 然后I这部分减去4414-385-10.5*0.037*1000=3640.5 接下来家去T得到NI：3640.5*0.86=3130.83 接下来算新的common stock数：529+44.6*1000/88=1035.818182 最后得到EPS: 3130.83/1035.82=3.022562 选A
      • Divestment
        • Motivation
          • focus operations and business lines
          • Valuation
            • Conglomerate discount
        • Types
          • Sales
            • sell a company, segment
          • Spin off
            • separate a distinct part of business into new company
            • remove incompatibilities
            • increase management and employee focus
      • Restructuring
        • motivation
          • improve returns on capital
          • Financial challenges
        • types
          • opportunistic improvement
            • alter business model
              • franchising
                • divest its asset and licenses the intellectual property into 3rd party operator
            • cost restructuring
              • trim cost structure
            • modify composition of balance sheet
          • forced improvement
            • cost restructuring
              • outsourcing
                • 标准化部门外包
              • offshoring
                • 经营从一个国家转移到另一个国家
            • balance sheet restructuring
              • sale leaseback
                • unlock value
                • improve B/S by retiring debt
                • improve credit rating
                • capitalization rate
                  • =回租租金/卖出价格
                  • 越低越好
              • dividend recapitalization
                • debt-financed dividends
                • share repurchases
              • 例题
                • RTN operates a fleet of aircraft serving 80 airports in the US. The company faces a temporary cash shortfall and has asked for advice on how to raise funds. Janiak recommends a sale leaseback whereby RTN sells assets for cash and signs a lease agreement to make lease payments for the aircraft over their remaining lives. Janiak's recommendation to RTN Airlines to address its cash shortfall is best characterized as a: A. reorganization B. cost restructuring C. balance sheet restructuring.
                  • C is correct A. Incorrect because this is a sale leaseback, not a reorganization. In a reorganization, a court-supervised restructuring process available in some jurisdictions for companies facing insolvency, a bankruptcy court assumes control of the company and oversees an orderly negotiation process between the company and its creditors for asset sales, conversion of debt to equity, refinancing, and so on. B. Incorrect because this is a sale leaseback, not a cost restructuring. A cost restructuring refers to actions with the goal of reducing costs by improving operational efficiency and profitability, often to raise margins to a historical level or to those of comparable industry peers. Outsourcing and offshoring are two common ways of reducing costs. C. Correct because a sale leaseback is an example of a balance sheet restructuring. A balance sheet restructuring alters the composition of the balance sheet by either shifting the asset composition, changing the capital structure, or both. On the assets side, most forms of restructuring involve selling assets to third parties for cash and concurrently entering into contractual agreements for their continued use. In a sale leaseback, an asset owner sells an asset to a lessor for cash and immediately signs a lease agreement for its use, typically for the asset’s remaining economic life. The result is that the asset owner receives cash up front, no longer owns the asset, yet, as the lessee, retains the right for future use.
                    • reorganization一般是破产，cost restructuring一般是降本增效。SLB等一般是B/S重组
              • 例题
                • The separation would be achieved through a series of sale-leaseback transactions with real estate investment trusts (REITs) that specialize in owning retail properties. Under the plan, Cone will sell its 100 owned grocery stores and lease them for 15-year terms with a combined annual rent expense of USD40 million.
                  • Cone's strategic real estate plan would be best characterized as a: A. reorganization. B. cost restructuring. C. balance sheet restructuring.
                    • 答案：C 解析：C is correct. Cone is undertaking a sale-leaseback transaction, which is a type of balance sheet restructuring. Cone would receive cash from the property sales and recognize a liability equal to the present value of future lease payments. A is incorrect because a reorganization is a court-supervised restructuring process available in most jurisdictions for companies facing insolvency from burdensome debt levels and, sometimes, as a strategic measure to renegotiate contracts with unfavorable terms. B is incorrect because a cost restructuring refers to actions whose goal is to reduce costs by improving operational efficiency and profitability, often to bring margins to a historical level or to those of comparable industry peers.
                      • 看到SLB，无脑BS restructuring
                  • Which of the following statements about Cone's motivations for the strategic real estate plan is incorrect? A. The transactions will enable Cone to sell a non-core business. B. The transactions will allow Cone to unlock the value of its real estate assets. C. The expected change in Cone's credit rating after the transactions will increase the firm's costs of capital.
                    • 答案：C 解析：C is correct. The sale leasebacks will improve Cone's balance sheet by retiring debt and likely improving its credit rating, which will decrease (not increase) its costs of capital. A is incorrect because real estate ownership represents a non-core business for Cone. Its core business is operating 50,000 square foot stores in all markets of the United States. B is incorrect because the sale lease backs will allow Cone to unlock the value in its real estate assets. Cone would receive cash from the property sales and recognize a liability equal to the present value of future lease payments
                      • 送分题
            • reorganization
              • court-supervised
      • Leveraged buyout (LBO)
        • include above 3
        • significant amount of debt to finance acquisition
    • Corporate transaction activity
      • asset prices
        • connection
          • 周期性
          • 价格和交易或者正相关
        • explanations
          • greater CEO confidence
          • lower cost of financing
          • overvalued stock prices
      • industry shocks
        • regulatory changes
        • technological changes
        • changes in growth rate of industry
  • Evaluation
    • initial evaluation
    • preliminary valuation
      • comparable company analysis
        • approach
          • 可比上市公司的乘数或者价格作为benchmark
          • 例题
            • During an internal discussion about a potential merger, Anna 's colleague makes the following three statements about the comparable company analysis method: Statement 1: The method is not sensitive to market mispricing. Statement 2: The estimates of value are derived directly from the market. Statement 3: The method provides a reasonable approximation of a target company's value relative to similar transactions in the market. Which of Anna 's colleague's three statements is correct? A. Statement 1 B. Statement 2 C. Statement 3
              • 答案：B 解析：B is correct. An advantage of the comparable company analysis method is that estimates of value are derived directly from the market. This approach is unlike the discounted cash flow method, in which the value is determined based on many assumptions and estimates. A is incorrect because the comparable company analysis method is sensitive to market mispricing. As an example, suppose that all the comparable companies are currently overvalued by the market. A valuation relative to those companies may suggest a value that is too high in the sense that values would be revised downward upon a correction. C is incorrect because the comparable company analysis method provides a reasonable approximation of a target company's value relative to similar companies (not transactions) in the market. It assumes that "like" assets should be valued on a similar basis in the market.
                • 老登C只错了一个单词，不是transaction，是company。读题一定要仔细读每一个单词。
        • adv
          • 估值源于市场
          • 信息易得
        • disadv
          • 找不到可比上市公司
          • 对错误定价敏感
          • 评估收购，要考虑takeover premium
      • comparable transaction analysis
        • approach
          • 类似公司交易的价格乘数
          • 例题
            • Phoebe Pascua heads Manika's corporate planning department. She gathers a sample of comparable transactions from related industries, all of which closed within the last two years, and then calculates the multiples at which each company was acquired. Having formed an initial estimate, Pascua considers whether the following issues justify further adjustments to the valuation: Issue 1: Barkada’s shareholders would require a takeover premium. Issue 2: The multiples reflect very low equity price levels caused by an ongoing recession. Issue 3: Growth prospects are much higher for Barkada than for the sample of recently acquired companies. Which of the following best justifies an adjustment to the takeover value calculated by Pascua? A. Issue 1 B. Issue 2 C. Issue 3
              • 正确答案：C A.Incorrect because, when using the comparable transactions approach, it is not necessary to separately estimate a takeover premium. The takeover premium is embedded in the comparable transaction multiples. B.Incorrect because, since the recession is still ongoing, the valuation multiples reflect the current industry and macroeconomic conditions. The analyst only needs to make adjustments or to exclude transactions before a certain date when the historical multiples do not reflect the changes in these conditions. C.Correct because, since the growth prospects are much higher for Barkada than for the sample of recently acquired companies, those acquisitions are not adequately comparable. In this case, Pascua may still use these data, which are only from related industries, but may need to adjust them. These derived values may not be accurate for the specific industry and may have to be adjusted
                • 注意这题是可比交易法，所以不需要调整收购溢价
                • 因为经济周期导致的不真实的价格需要考虑，但是在可比交易法，对比的和即将交易的，都是在同一个经济周期阶段，所以反而不需要调整
                • 在可比交易法中，如果一些对比的参数不合适，需要调整
          • 例题
            • Cone believes the pro forma capital structure following the transactions will enable it to receive an investment-grade credit rating. The sale-leaseback transactions value the 100 assets at an average capitalization rate of 5.50%. Based on Anna 's colleague's research, the 25th, 50th, and 75th percentile cap rates for sale transactions for similarly situated properties and similar lease terms in the last three years were 5.00%, 5.50%, and 6.00%, respectively. Which of the following statements best describes Cone's average capitalization rate for the sale-leaseback transactions? Cone's average capitalization rate: A. is supported by the comparable transactions. B. compares favorably to the comparable transactions. C. compares unfavorably to the comparable transactions.
              • 答案：A 解析：A is correct. Cone's average capitalization rate for the sale-leaseback transactions is 5.50%, which is supported by the median of the 25th, 50th, and 75th percentile cap rates for sale transactions for similarly situated properties with similar lease terms in the last three years (5.00%, 5.50%, and 6.00%). B and C are incorrect because Cone's average capitalization rate for the sale-leaseback transactions is 5.50%, which is supported by the median of the 25th, 50th, and 75th percentile cap rates for sale transactions for similarly situated properties with similar lease terms in the last three years (5.00%, 5.50%, and 6.00%).
                • 这题要注意A和B的微妙关系。如果只有B和C，倒是可以选B。但是因为有了A，所以A说的是符合，B说的是获利，明显A就比B好。
        • Adv
          • 收购溢价已经在估值中
        • Disadv
          • 找不到交易
          • 历史价格乘数受到影响的因素多
      • premium paid analysis
        • takeover premium
          • PRM = (DP-SP)/SP
            • DP = deal price per share
            • SP = unaffected stock price per share
    • modelling and valuation
      • modelling
      • cases
        • 具体题目具体复习，随机应变吧，少年
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