How to solve questions on TVM, portfolio theory, bond and equity valuation
This video provides a detailed breakdown of bond valuation, guiding viewers through essential concepts and calculations. It starts by explaining the basics of bond pricing, including coupon payments, missed payments, and how to calculate the required return. A visual timeline helps clarify the payment structure, and the bond valuation formula is applied step-by-step. The instructor covers advanced topics such as adjusting for missed payments and handling zero-coupon bonds. Moving forward, the video explores annuities and perpetuities, focusing on converting quoted rates to effective annual rates and solving complex valuation problems. Key concepts such as growing annuities and perpetuities are explained with emphasis on discounting and using the appropriate formulas. The video also transitions into equity valuation, showcasing the Dividend Discount Model (DDM) and how to handle varying discount rates over time. With clear explanations and engaging examples, this video offers a comprehensive guide to mastering bond and equity valuation for exam preparation or practical application.