Unit 5b - Share valuation (003).pptx (CFM22A2)

M ENT 2A
ANA G E
FI NA N CI A L M
A N D
COST
2016 oza
NTED B
Y: er, R Kh
PRESE , L Pelch
P Ramutumbu
,
L Boyce

, h apt e r 9)
r e valu ation (C
5b : S ha
UNIT

, Learning Outcomes and Assessment Criteria

• differentiate between ordinary shares and preference shares,
• importance of share valuation,
• distinguish between par value, market value, book value and
economic value; and
• valuation of ordinary and preference shares using:
• Discounted cash flows
• Zero dividend growth
• Constant dividend growth
• Variable dividend growth
• Relative valuation techniques (i.e. P/E & price: book ratio)
• distinguish between the expected return and required rate.




UNIT 5b :Share valuation

, Development of stock exchanges




• JSE
• FOUNDED 1887 - Platform for mining & financial companies to raise capital
• 1995 – Deregulated
• 1996 – replaced open cry market (auction) to order driven, centralized, automated trading
system
• 2006 – JSE company lists on the main board
• 2009 – Bond exchange of South Africa becomes wholly owned subsidiary of JSE




UNIT 5b :Share valuation