This website uses cookies to ensure you have the best experience. Learn more

Stock Price Valuation And Beta Calculation

1247 words - 5 pages

There are many choices in the market for the investors to generate more money and income with the capital that they able to invest. These tools are categorized into many different types of market such as equity market, bond market, and mortgage market, according to their characteristics. The markets are well-growing and establishing all around world due to the people’s awareness of investment, the globalization, the governments’ policies, and the change of technology. Equity market is one of the well performing markets. The companies raise fund from the public by listing themselves in the stock exchanges. Such objective can be done by distributing the common stock, preferred stock, and convertible securities. The voting rights, priority claim, ownership, and types of compensation are determined by their characteristics. The investors will purchase the stocks based on their requirements and preferences. Two types of market are found in the stock markets, which are the primary and secondary market. The primary market enables the companies to gather the funds directly from the investors when the secondary market provides the liquidity to the shares by enabling the investors to trade among themselves.
Stock price valuation
In Malaysia, the only stock exchange is the Bursa Malaysia. The Kuala Lumpur Composite Index (KLCI), also known as the FTSE Bursa Malaysia KLCI, is the main stock index. The basket consists of the 30 largest market capitalization companies in Malaysia (The Edge Malaysia, 2009). 70 % of the market capitalization for the local bourse is made up by these 30 companies (The Edge Malaysia, 2009). Its performance will signal the investors about the market condition in Malaysia. Next, Genting Berhad (GENTING, 3182) is a leading company in the trading and service sector under the Genting Group. Currently, the company has the market capitalization of RM 41,182.75 million and 3,716.86 millions of outstanding shares (Bloomberg, 2012). Kien Huat Realty Sdn Bhd is the main shareholder of Genting Berhad, which is owned by the Tan Sri (Dr.) Lim Goh Tong’s family with 39.7% of shares (Genting, n.d.). The company started to operate on 30 July 1968 with its original name of Genting Highlands Hotel Sdn Bhd (Genting, n.d.). After it operated for 3 years, it became a listed public company with the name of Genting Highlands Hotel Berhad and changed to the present name of Genting Berhad after listed for 7 years (Genting, n.d.). Currently, Genting Berhad is the investment holding and management company of Genting Group (Genting, n.d.). The company operates the businesses in different industries such as palm oil production, electricity power generation and supply, and the paper manufacturing. A stock price valuation on Genting Berhad and the comparison between Genting Berhad’s and KLCI’s 30 days data will be done.
"stock price=" dividend/(required rate of return)
The equation above will be used to conduct the Genting Berhad’s stock price valuation....

Find Another Essay On Stock Price Valuation and Beta Calculation

Importance of EMH in the valuation and investment Internet-related stock market

2980 words - 12 pages ; capitalization; etc.P/E ratiosThe P/E ratios, ie relationship between the stock price and its earnings per share can still be used in evaluating. The P/E ratio should be compared to other factors like company's growth, indications of financial leverage, and the size of its category.RatingsRatings are based on the belief that a company can grow into its current valuation. Different reports give different ratings, but it may not be a good idea to blindly

Real Estate Volatility Tests Essay

986 words - 4 pages the approach for beta as the only predictor for differences in expected return (Haugen, 1999, p.238-239). Basu (1977) however, divided stocks on the basis of earnings-stock ratios and found that the CAPM underestimated the high earnings to price stocks while it overestimated the low earnings to price stocks. Bhandari (1988) found that stocks with high debt-equity ratios systematically are underestimated compared to their market betas presented by

Capital Valuation : Apple Co

999 words - 4 pages process of determining the current worth of an asset or company. Valuations are needed for many different reasons including investment analysis, merger and acquisition transactions, capital budgeting, etc. In this paper our team will justify the current market price of Apple's debt and equity using valuation techniques such as Free Cash Flow to Equity (FCFE), Free Cash Flow to Firm (FCFF), and Dividend Discount Model (DCM).Free Cash Flows to

asdfadsfaslkdf;dsf;adslkfa;sldfja;lrkgmar;

8738 words - 35 pages Calculation of Free Cash Flow ...................................................................................... 22 4.2.2 Estimated Long‐term Growth Rate .............................................................................. 24 4.2.3 Equity and Stock Valuation ........................................................................................... 24 4.3 Relative Valuation

Nike Inc. Case

1702 words - 7 pages everyone providing the capital (creditors, owners, etc.). WACC in fact includes all capital sources, such as bonds, preferred stock, common stock, any long-term debt. To calculate it sometimes could be laborious, especially if the firm has a complex capital structure.If the beta and the rate of return on equity of the company increase also WACC increases. This cause an increase in the risk and a decrease in valuation. Businesses -included Nike- often

Nike Inc. Case

2073 words - 9 pages everyone providing the capital (creditors, owners, etc.). WACC in fact includes all capital sources, such as bonds, preferred stock, common stock, any long-term debt. To calculate it sometimes could be laborious, especially if the firm has a complex capital structure.If the beta and the rate of return on equity of the company increase also WACC increases. This cause an increase in the risk and a decrease in valuation. Businesses -included Nike- often

Nike, Inc

1297 words - 5 pages to be 7.16 percent and the current bond price is $95.60. from Exhibit 5 we can defined the tax rates to 83%. Thus, we can calculate the cost of debt using equation as shown above.Kd = 7.16 ( 1-0.38) = 4.43922. The Cost of Preferred Stock (kp)KP = DP/(PP - F)In the above equation, "F" represents flotation costs (in $). As was the case for debt, the cost of raising new preferred stock will be more than the yield on the firm's existing preferred

Grand Metropolitan Plc

1371 words - 5 pages & Poor’s 500 index. And more important, rumors had that GrandMet, valued at more than $14 billion in the stock market, maybe a takeover target. The management dilemma is to understand why the company’s stock is traded below of what considered being the right price and whether the company is truly being undervalued by the market or there are consistent issues with negative NPV projects and lines of businesses. WACC calculation I. Cost of debt

Tradeoffs of Multiples versus DCF essay for unsw fins3625 presentation

4019 words - 16 pages questions.DCF valuation obtains the closest thing to intrinsic stock value, through fundamental analysis of financial data. In this respect, DCF holds significant advantage over Multiple analysis.For instance, it factors in the time value of money, which is critical in financial analysis. It is also forward looking as opposed to backward looking. .Furthermore, compared to multiples. It is not as vulnerable to accounting conventions and

Smorgon

2009 words - 8 pages risk model that uses beta as its sole measure of risk ( a single factor model) is called the Capital Asset Pricing Model (CAPM) and is used by many market analysts in their valuation process. The relationship between risk and return that comes out of that model and the one that is incorporated into our FCFF analysis and spreadsheet software is:Exp.(Rs) = (Rf) + beta(Rerp)Which in English translates to "The expected return on a stock (e.g

Tabcorp Holdings Ltd: The main purpose of this project is to let you apply the valuation principle learned in this subject to conduct the fundamental analysis on the share value

2378 words - 10 pages company is assumed to have reached maturity and does not have earnings growth. Hence profit after tax remains constant for perpetuity and there is no net investment or change in working capital.Based on these variables, Valuepro.xls calculated a share price of $18.43. The calculations are shown in Appendix 4. The calculation of the WACC is shown in Appendix 5.Sensitivity AnalysisThe stock price will change as a result of variations in key assumptions

Similar Essays

Risk Management In Stock Valuation And Markets

2705 words - 11 pages company ("The capital asset,"). To understand it more clearly consider an example. Assume that that the risk free rate is 5 percent and the expected rate of return on the market is 10 percent with a beta of 2.0, then the calculation for CAPM is: Rp = 5% + (10%-5%) * 2.0 = 15% (Madura, 2011) Arbitrage pricing model Ross developed the arbitrage pricing theory. According to this theory price of stock can be influenced by a number of market

Home Products: Stock And Bond Valuation

689 words - 3 pages yield and the expected capital gains yield for HPI common stock?PV = 40.625; PMT = .385Dividend / Price = (.385 *4) / 40.625 = 3.79%g = 9.7%7.Given that HPI is selling for $40 5/8, what is its required rate of return? (Use the constant growth valuation model.)P0 = (1+g) D0 / (r - g)40.625 = 1.6894 / (X - 0.097)40.625 X - 3.9406 - 1.6894; 40.625 X - 5.63 = 13.86%

Realtionship Between Stock Price And Fdi

1729 words - 7 pages their investment into Asian country. These trends are happen because the Europe country is not able to decrease the effect of the economic crisis which make the investor loss the confidence and invest into the country which have high profitability such as China, India, Malaysia and other Asian country. How is the stock price effect by foreign direct investment in developing country? According to Gordon (1959), the variation in price among common

Overview About Liquidity, Asset Price And Chinese Stock Market

1722 words - 7 pages in the financial area. Therefore, the analyses about how liquidity affects asset prices are come out. In this essay, the role of liquidity, price setting, relationship between liquidity and asset pricing with liquidity measures of the Amihud and Mendelson Model based on bid-ask spread, the traditional model capital asset pricing model (CAMP) and the new model ILLIQ will be illustrated and explored based on certain of examples from stock market