Dear CFA® Program Level I Candidate, With less than a week left to your exam date, we hope you are practicing questions and mock test keeping the Commandments and Sins in mind.
In this session, we will share with you the Commandments and Sins of Equity Investments.
- Remember that technical analysis is a direct violation of weak-form EMH and Fundamental analysis is a direct violation of semi-strong from EMH
- Concepts that need to be crystal clear before entering the exam hall: The difference in FCFE and FCFF and which discount rate is applicable under both of them is of utmost importance.
- Don’t forget to discount the terminal value while calculating the intrinsic value of a stock in the exam. This is a general mistake which students do.
- Never confuse between the required rate of return and the growth rate in the Gordon Growth Model Equation.
- The top-down approach is a method of valuation that begins with first analyzing the overall economy and then continuing to drill down to the specific analysis.
- Enterprise Value (EV) = Market Cap (of Equity) + Market Value of Debt – Cash and Cash Equivalents (including marketable securities)
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