Aswath Damodaran

Session 24 (MBA): Dividend Analysis and First Steps on Valuation

Fri, 11 Sep 2026 03:07:00 -0000

In this class, we put the closing touched on dividend policy analysis by going through the possess of estimating FCFE, the cash flow left over after capital expenditures, working capital needs and debt payments. My suggestion is that you estimate the aggregate FCFE over 5 years (or as many years as you have data) and compare it to the cash returned. We ended the class by talking about the distinction between valuing equity and valuing an entire business.
Slides:
http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session24.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session24test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session24soln.pdf

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Data Update 2 for 2024: A Comeback Year for Stocks!

Thu, 10 Sep 2026 21:07:00 -0000

As we start on 2024, it is worth noting how much the mood has shifted in the last year. At the start of 2023, dark clouds were gathering. Inflation was out of control and a recession seemed imminent, but the S&P 500 surprised us all by delivering a 26% return. That recovery was uneven, with seven stocks accounting for a big portion of the gain, and disparate returns across sectors. The 2024 outlook is much sunnier, with the consensus shifting to a soft landing and inflation largely under control, and those higher expectations may be the biggest challenge for equities this year. The expected return (8.48%) and the equity risk premium (4.60%) for the S&P 500 do not set off red flags, by themselves, but an intrinsic value of the index (see link) leads me to conclude that stocks are over valued by about 9%, to start the year. Your outlook on earnings and interest rates may be different from mine, leading you to a different valuation and conclusion.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate2for2024.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2024/01/data-update-2-for-2024-stock-comeback.html
Valuation of the S&P 500 on January 1, 2024: https://pages.stern.nyu.edu/~adamodar/pc/blog/S&P500ValueJan2024.xlsx
Historical Returns on stocks - 1928 -2023: https://pages.stern.nyu.edu/~adamodar/pc/datasets/histretSP.xlsx
Historical expected returns and implied premiums for S&P 500: https://pages.stern.nyu.edu/~adamodar/pc/datasets/histimpl.xls

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Journeying to the Dark Side: Coping with Uncertainty

Thu, 10 Sep 2026 15:07:00 -0000

In this webcast, I look at why we feel that we are in the age of uncertainty and the natural responses (mostly unhealthy) that we have to its presence in business and investing. I also look at coping mechanisms that we can use to deal with uncertainty and why I think that this may be an edge in investing.
Blog post: http://aswathdamodaran.blogspot.com/2016/05/dcf-myth-3-you-cannot-do-valuation-when.html
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/DCFMythUncertainty.pdf

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Session 1 (Val Undergrads): introduction to class

Thu, 10 Sep 2026 09:07:00 -0000

The undergraduate class is officially rolling, and thank you tuning in. During the session, I told you that that this was a class about valuation in all of its many forms – different approaches (intrinsic, relative & contingent claim), different forums (for acquisitions, value enhancement, investing) and across different types of businesses (private & public, small and large, developed & emerging market). After spending some time laying out the script for the class (quizzes, exams, weekly tortures), I laid out the philosophical foundations for valuation, by noting that it is a bridge between story and numbers and that it is different from pricing.
Home page for class: https://pages.stern.nyu.edu/~adamodar//New_Home_Page/equityUG.html
Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/firstclass.pdf
Syllabus: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/eqUGsyllspr24.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session1test.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session1soln.pdf

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Session 23(MBA): Potential Dividends and Cash Balances

Thu, 10 Sep 2026 03:07:00 -0000

In this shortened class, we moved on to look at how much a company can afford to pay out as dividend. This measure, that I titled FCFE, is the cash left over after taxes, reinvestment needs and net debt payments. When a company pays out less than its FCFE, it is accumulating cash, and we laid the foundations for analyzing dividend policy by asking the key question: do you trust managers with your cash? During the session, we applies this framework to the Disney, Vale and BP.. Post class test and solution attached Until next time!
Slides:
http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session23.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session23test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session23soln.pdf

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Session 2 (Val Undergrads): The Bermuda Triangle of Valuation

Wed, 09 Sep 2026 21:07:00 -0000

The class started with a test on whether you can detect the direction bias will take, based on who or why a valuation is done. The solutions are posted online on the webcast page for the class. We then moved on to talk about the three basic approaches to valuation: discounted cash flow valuation, where you estimate the intrinsic value of an asset, relative valuation, where you value an asset based on the pricing of similar assets and option pricing valuation, where you apply option pricing to value businesses. With each approach, we talked about the types of assets that are best priced with that approach and what you need to bring as an analyst/investor to the table. For instance, in our discussion of DCF valuation and how to make it work for you, I suggested that there were two requirements: a long time horizon and the capacity to act as the catalyst for market correction. Since I mentioned Carl Icahn and Bill Ackman as hostile acquirers (catalysts), you may want to look at Herbalife, the company that Ackman has targeted as being over valued and Icahn did for being under valued. See if you can get a list going of how each is trying to be the catalyst for the correction... and think about the dark side of this process. We will be starting on the first lecture note packet on Monday.
Home page for class: https://pages.stern.nyu.edu/~adamodar//New_Home_Page/equityUG.html
Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/biasshort.pdf
Project: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/eqprojspr24.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/ValIntroSpr24.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session2test.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session2soln.pdf

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Session 25 (Undergraduate): Potential Dividends and Cash Balances

Wed, 09 Sep 2026 15:07:00 -0000

In this session, we began by looking at bad reasons for paying dividends (more certain than capital gains, excess cash this year) as well as good reasons (investment clientele, signaling & debt/equity conflicts). We then came up with a measure of potential dividends (FCFE) and examined the consequences of paying out less or more to stockholders, and why some companies have more flexibility than others.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session25.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session25atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session25asoln.pdf

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Data Update 3 for 2024: A Rule Breaking Year for Interest Rates

Wed, 09 Sep 2026 09:07:00 -0000

After a calamitous year for bond in 2022, investors faced 2023 with trepidation, but as with stocks, bonds delivered a positive surprise. Short term treasury rates rise, perhaps in response to the Fed's bellicosity, but treasury bond rates stayed unchanged. In fact, the behavior of the bond market and the response of the economy in 2023 tested two widely held nostrums in markets - that the Fed sets interest rates and that a downward sloping yield curve is a precursor to a recession - and found both fell short. Government bond rates in other currencies also mirrored US dollar rates, and followed a strong rise in 2022 with little change in 2023. For companies, the biggest change during the year was that default spreads decreased significantly during the course of the year, as investors became less fearful.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate3for2024.pdf
Blog Post:

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Session 23(MBA): FCFE (Potential Dividends) and Cash Balances

Wed, 09 Sep 2026 03:07:00 -0000

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Data Update 4 for 2024: Danger plus Opportunity - Risk enters the Equation!

Tue, 08 Sep 2026 21:07:00 -0000

Risk is at the center of finance, both in the context of business decision making and investments. In this session, I start by breaking risk down into buckets and looking at the evolution of measures of risk. I look at differences across companies and regions, using both price-based and intrinsic risk measures. I then look at risk variations across countries and how they play out as different equity risk premiums. In closing, I look at how the inputs in this and the prior to two data updates help in computing the cost of capital, why that cost of capital affect decision making and the distribution of costs of capital, at the start of 2024.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate4for2024.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2024/01/data-update-4-for-2024-danger-and.html
Cost of capital paper: https://pages.stern.nyu.edu/~adamodar/pdfiles/papers/costofcapital.pdf
Country risk paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4509578
Equity Risk Premiums, by country: https://pages.stern.nyu.edu/~adamodar/pc/datasets/ctryprem.xlsx

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Quiz3: Review Session (MBA)

Tue, 08 Sep 2026 15:07:00 -0000

This quiz will cover all of capital structure, from the trade off to optimizing the mix to the right kind of debt.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/cfexams/reviewQuiz3.pdf
Past quiz 3s: http://www.stern.nyu.edu/~adamodar/pdfiles/cfexams/prqz3.pdf
Past quiz 3 solutions: http://www.stern.nyu.edu/~adamodar/pdfiles/cfexams/prqz3sol.xls

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Session 1 (CF MBAs); Corporate Finance - The Big Picture

Tue, 08 Sep 2026 09:07:00 -0000

In this session, I laid out the structure for the class and an agenda of what I hope to accomplish during the next 15 weeks. In addition to describing the logistical details, I presented my view that corporate finance is the ultimate big picture class because everything falls under its purview. The “big picture” of corporate finance covers the three basic decisions that every business has to make: how to allocate scarce funds across competing uses (the investment decision), how to raise funds to finance these investments (the financing decision) and how much cash to take out of the business (the dividend decision). The singular objective in corporate finance is to maximize the value of the business to its owners. This big picture was then used to emphasize five themes: that corporate finance is common sense, that it is focused, that the focus shifts over the life cycle and that you cannot break first principles with immunity.
Syllabus: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/cfsyllspr24.pdf
Post class test 1: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session1test.pdf
Post class test 1 solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session1soln.pdf

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Session 24 (Undergraduate): The Trade off on Dividends

Tue, 08 Sep 2026 03:07:00 -0000

We spent all of the session setting up the trade off on dividends, starting with the argument that Miller/Modigliani made that dividends don't matter (in a world where investors are taxed at the same rate on dividends & capital gains & stock issuance is costless) to the dividends are bad school (built on the almost century long higher tax on dividends) to the dividends are good school.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session24.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session24atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session24asoln.pdf

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Session 5: Estimating Hurdle Rates - The Risk free Rate

Mon, 07 Sep 2026 17:27:16 -0000

Estimate the foundation for all discount rates, a risk free rate.

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Session 35 (of 42): The Case for Passive Investing - Active Investors' Track Record

Mon, 07 Sep 2026 16:24:32 -0000

In this session, we make the argument for passive investing by looking at the performance of active investors. We begin by looking at individual investors and note that they collectively under perform the market and that the under performance gets worse as they get more active. There is some cause for hope, though, since the very best investors do substantially out perform the market, especially if they stick to the companies that they know and don’t diversify too much. With mutual funds, the evidence is not favorable, since mutual funds under perform indices and the under performance cuts across all classes of mutual funds. Collectively, active investing does not seem to provide much of a payoff.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session35.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session35test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session35soln.pdf

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Session 4: Defining and Measuring Risk

Mon, 07 Sep 2026 15:21:49 -0000

Looks at how we define risk in finance and alternate models for risk and return.

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Session 22(MBA): Dividend Trade Off

Mon, 07 Sep 2026 15:07:00 -0000

We spent all of this session setting up the trade off on dividends, starting with the argument that Miller/Modigliani made that dividends don't matter (in a world where investors are taxed at the same rate on dividends & capital gains & stock issuance is costless) to the dividends are bad school (built on the almost century long higher tax on dividends) to the dividends are good school. We closed by looking at two bad reasons for paying dividends (that they are more certain, that you had a good year) and three potentially good reasons (to signal to market, to make your clientele happy and to take advantage of debt holders).
Slides:
http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session22.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session22test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session22soln.pdf

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Finding your Investing Lodestar: In Search of an Investment Philosophy!

Mon, 07 Sep 2026 14:19:05 -0000

An investment philosophy is a coherent set of beliefs about how markets work (and sometimes don't work) that underpins your investment strategies and choices, and it is a critical ingredient for successful investing in the long term. Many investors (including quite a few professional and institutional investors) lack core philosophies, and consequently end up chasing last year's winners or falling for investment scams. Others try to imitate successful investors, believing that imitation will lead to similar success in markets, but are often disappointed. There is no one "best" investment philosophy for all investors, but there is one that is right for you that fits your beliefs about markets and your personality. I have a book and a (free) online class on the process that you go through to find this philosophy, and I have updated both, with the third edition of the book available on March 31, 2026, at booksellers, and the new version of the class online (on both my webpage and as a YouTube playlist).
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/InvPhil.pdf
Blog post: https://aswathdamodaran.blogspot.com/2026/03/finding-your-investing-lodestar-in.html
Book links:
Webpage for book: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/invphil3edbook.htm
Booksellers: Amazon: https://bit.ly/40UqMyL
Barnes and Noble: https://www.barnesandnoble.com/w/investment-philosophies-aswath-damodaran/1122867680 (25% off until March 26, 2026)
Class links:
My webpage: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcastinvphil2025.htm
YouTube Playlist: https://youtu.be/jBl8FXPc9tY?si=eF0WfFZDwVpz6K1I

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Session 3: The Objective in Corporate Finance - Reality

Mon, 07 Sep 2026 13:16:21 -0000

Looks at the real world issues with maximizing stock prices.

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The Market's Narrative: How Investors are pricing in the Iran War!

Mon, 07 Sep 2026 12:13:38 -0000

The month of March 2026 was dominated by one story - the war in Iran and how it would play out. The month started with questions about how long the war would last and what effects it would have on the region and on global economies in the short and long term, and it ended with those questions still unanswered. As you try to make sense of competing narratives from experts (sell-anointed and real), you may want to check out the narrative in the market. I use market data, starting with oil prices and interest rates, and moving on to risk premiums, to conclude that, at least so far, this has been a market that is trying to reassess value, given the economic consequences of war, rather than one driven by panic. Oil prices are up strongly, but there are geographic and time variations, with Brent rising more than West Texas crude, and spot prices surging more than future. Equity risk premiums, bond spreads and the volatility index are all up, but not in the magnitudes that you would see in crisis market.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/WarandOil.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2026/04/oil-war-and-global-economy-markets.html
Data:
Day-by-day ERP: https://pages.stern.nyu.edu/~adamodar/pc/blog/AlldataMarch2026.xlsx
ERP by country (updated to March 31, 2026): https://pages.stern.nyu.edu/~adamodar/pc/datasets/ctrypremApr26.xlsx

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Session 2: The Objective in Corporate Finance

Mon, 07 Sep 2026 11:10:54 -0000

Sets up the objective in corporate finance decision making

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To Trillion(s) and Beyond: The SpaceX IPO Odyssey

Mon, 07 Sep 2026 10:08:10 -0000

In a world where so many companies claim to be unique and futuristic, SpaceX is the real deal, a package of spaceships, satellites and AI. When he founded the company in 2002, Elon Musk announced that he was doing so to make the costs of going into space lower and to make space travel possible. While the space establishment gave the company little chance of succeeding, it has delivered on the first promise, with its reusable rocket technology allowing for much cheaper launches into space. Along the way, the company has branched out into two other businesses - an internet service business built around thousands of satellites that it has launched into space, and AI, with its acquisition of xAI. As it get ready for an IP0, I tried to value and price the company, albeit with minimalist information, since the prospectus is still not public, and there are no comparable public companies in these spaces. With different storylines for the launch, internet and LLM business, and building on the moats that SpaceX has (at least in the first two), I attach a valuation of $1.22 trillion to the company, an astonishingly high number for a company that generated $16 billion in revenues in 2025. I will revisit the valuation, once the prospectus is filed in the next few weeks, but I do not expect that public filing to change my story line by much.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/SpaceXIPO.pdf
Blog post: https://aswathdamodaran.blogspot.com/2026/04/to-trillion-dollars-and-beyond-spacex.html
Valuation of SpaceX: https://pages.stern.nyu.edu/~adamodar/pc/blog/SpaceX2026IPO.xlsx

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Session 3 (Val Undergrads):: First Steps on Intrinsic Valuation

Mon, 07 Sep 2026 09:07:00 -0000

We started class by completing the discussion of pricing and real options, at least in a big picture sense. We then began our intrinsic value discussion by talking about the weapons of mass distraction. If you want to read the blog post I have on the topic, try this link:
http://aswathdamodaran.blogspot.com/2014/03/if-it-is-strategic-growth-investment-in.html
We then spent some time setting up the process of discounted cash flow valuation, arguing for consistency in discounting. If the cash flows that you are discounting are cash flows to equity, estimated either as dividends or as potential dividends, the discount rate should be the cost of equity. If the cash flows that you are discounting are pre-debt cash flows, i.e,, cash flows to the firm, the discount rate has to be the cost of capital. Done right, the value of equity should be equivalent with both approaches.
Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/kennecott.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/ValIntro24.pdf & Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session3slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session3test.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session3soln.pdf

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Session 31: Cash Flows and Growth Rates

Mon, 07 Sep 2026 09:05:27 -0000

Cash flows and growth rates, for valuation

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An Ode to Restraint: Lessons from the Tim Cook Legacy!

Mon, 07 Sep 2026 08:02:43 -0000

I have been a user of Apple products since the first Mac came out in the early 1980s, and I have been an investor off and on in the company for much of its life. The announcement that Tim Cook was planning to step down as CEO after a stint of fifteen years atop the company caught my attention, and in this session, I look at his legacy. Given that Cook was preceded by Steve Jobs, it is almost unavoidable that comparisons will be made between the tenures of the two, and I do so. Without taking anything away from the Steve Jobs legend, I feel that investors and observers have underplayed how well Tim Cook has played the cards he was dealt,, as he has helped Apple transition from being the disruptive growth engine it was under Jobs to the cash machine that it became under Cook. While Cook has been critiqued for being too cautious and missing out on tech trends, the trade offs he made have worked out well for shareholders. I do believe that his discipline and restraint deserve celebration.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/CookatApple.pdf
Blog post: https://aswathdamodaran.blogspot.com/2026/05/an-ode-to-restraint-lessons-from-tim.html

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Session 32: Terminal Value

Mon, 07 Sep 2026 07:00:00 -0000

Rules on keeping terminal value in check

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The Numbers are in: A Post-Prospectus SpaceX Valuation!

Mon, 07 Sep 2026 05:57:16 -0000

I value SpaceX a few weeks ago, using piecemeal information and entirely on narrative, and promised to return to the valuation when the prospectus was public. The prospectus has now been filed, and the offering price set, and I revisit SpaceX, armed with the additional information. At the risk of giving away the ending, my story for SpaceX has become both bigger and more volatile, bu my overall valuation for SpaceX barely budged (at $1.22 trillion) and with the $75 billion cash proceeds from the IPO, the value of equity comes in at $1.3 trillion. The prospectus does paint a picture of a company that plans a full-bore assault on the AI market, with its pluses (a potentially huge market) and its minuses (poor unit economics and huge capital expenditures). If you are surprised that a 400-page prospectus did not have a bigger impact on the valuation, I look at how financial statements affect value as a company moves through the life cycle, arguing that the types of questions that you need answered are very different, when you are valuing young businesses. I close with a description of the IPO process, and how understanding the motivations of the players involved can help in making a decision on whether you should invest in the company or trade its stock.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/SpaceXpostprospectus.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2026/06/a-weeks-ago-i-assessed-value-of-spacex.html
Prospectus: https://www.sec.gov/Archives/edgar/data/1181412/000162828026036936/spaceexplorationtechnologi.htm
Post-prospectus valuation: https://pages.stern.nyu.edu/~adamodar/pc/blog/SpaceX2026IPOUpdated.xlsx

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Session 33: Valuation Loose Ends

Mon, 07 Sep 2026 04:54:32 -0000

Dealing with the loose ends in valuation

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The Indexing Question: Should SpaceX, OpenAI and Anthropic be in the SandP 500?

Mon, 07 Sep 2026 03:51:49 -0000

As debate has raged about whether SpaceX is worth $ 2 trillion plus, and how much Anthropic and OpenAI will be priced at, there is a parallel question that has created just as much heat on whether these stocks should be included in the S&P 500. There are many who seem to be arguing against inclusion, with three different groups (and agendas) at play - active investing professionals who arguing that inclusion will make the S&P 500 an (even more) flawed investment vehicle for passive investors, academics and experts suggesting that inclusion would expose small investors and retirees to risks that they should not be taking (of over priced and money losing companies) and politicians who feel that inclusion will enrich the billionaire founders of these companies. In truth, the index inclusion effect has weakened over time, even as passive investing has surged, and the notion that small investors are uninformed and need protection from their mistakes is condescending and wrong. There is little benefit that these companies (SpaceX, OpenAI and Anthropic) will gain from being included in the index, and that the S&P 500 needs these companies in the index to preserve its standing as an index that tracks large cap US equities.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/Indexology.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2026/06/indexology-index-mechanics-and.html

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Quiz 3: Review Webcast

Mon, 07 Sep 2026 03:07:00 -0000

This webcast covers the material for the third quiz, all of capital structure, starting with the trade off, working through ways of optimizing the mix and ending with debt design.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/cfexams/reviewQuiz3.pdf
Past quiz 3s: http://www.stern.nyu.edu/~adamodar/pdfiles/cfexams/prqz3.pdf
Past quiz 3 solutions: http://www.stern.nyu.edu/~adamodar/pdfiles/cfexams/prqz3sol.xls

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Session 34: The Value of Control

Mon, 07 Sep 2026 02:49:05 -0000

A corporate finance view of the value of control

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Country Risk: Determinants, Measures and Implications - The 2026 Edition

Mon, 07 Sep 2026 01:46:21 -0000

Since 2008, every year, in addition to posting updated data on equity risk premiums, I have done two update papers each year. I write the first, on equity risk premiums, in March of each year, and the second, on country risk, in July. These papers are catch-all publications, reflecting everything that I know or have learned about each of these topics, mostly in the process of having to deal with them in corporate financial analysis and valuation. As a consequence, these are written for practitioners, not academics, and they are driven by pragmatism, not purity. My latest country risk update (for 2026) is now accessible and you can download the paper, if you are interested, at the link below:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7107638
In this session, I summarize the paper, starting with the drivers of country risk - politics, corruption, exposure to violence and the strength of the legal system - before moving on to measures of country risk - sovereign ratings and CDS spreads for default risk, country risk scores and country equity risk premiums. I also talk about how these country equity risk premiums come into play when valuing companies as well as in estimating project hurdle rates in corporate finance. I close with a discussion of currencies, and why done right, valuations should be currency invariant.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/countryrisk2026.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2026/07/country-risk-drivers-measures-and.html
Paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7107638
Data:
1. Country equity risk premiums: https://pages.stern.nyu.edu/~adamodar/pc/datasets/ctrypremJuly26.xlsx
2. Riskfree rates, based on expected inflation: https://pages.stern.nyu.edu/~adamodar/pc/blog/DiffInflationRiskfree26.xlsx

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Session 35: Relative Valuation

Mon, 07 Sep 2026 00:43:38 -0000

Relative valuation

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Information Timing and Release: The Debate over Quarterly Reporting and Fed Guidance!

Sun, 06 Sep 2026 23:40:54 -0000

In this session, I talk about two long-running stories in markets, the first relating to a SEC proposal to replace quarterly with semi-annual reporting for US firms and other to Kevin Warsh's (the new Fed chair) view that the Fed should speak less and provide less guidance. The common themes in both stories is that they remove "news" that the market has become to receiving and using to set prices, and the advocacy and opposition to both proposals share commonalities. Advocates for the changes argue that removing quarterly reporting will make makes less "short term" and that reducing Fed guidance will also reduce the gaming around Fed actions. Opponents to the changes point to the loss of information that markets can use to set prices, and increased volatility in markets.
I see shades of grey. I do like access to quarterly reports in my investing, since they allow me to update my valuations more frequently, but I also believe that earnings reports have become bulky and filled with distractions. Rather than reducing the frequency of reporting, I would prefer slimmer reports that have less management guidance and prognostications.
As for the Fed, I do think it is healthy for investors to step back from the post-2008 view of the Fed as an all-powerful institution that can set interest rates and alter the trajectory of the economy. Neither perception is based in reality, and a world where we see less and hear less from the Fed will be a healthier one.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/quarterly.pdf
Blog post:

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Session 36: Closing Thoughts

Sun, 06 Sep 2026 22:38:10 -0000

Wrapping up the final pieces of Corporate Finance

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Lessons from Leo: The Dark Side of Investment Conviction!

Sun, 06 Sep 2026 21:35:27 -0000

If you have been reading the financial press or tracing social media, the story of Leo Aschenbrenner and the rise and fall of his hedge fund, Situational Awareness, has been widely covered, with different views on causes. I use the story of this fund, created to monetize Leo's vision of AI as an immensely successful disruption in the near term, to talk about investment conviction, words often used as positives, when talking about investing. I look at the continuum of conviction from absolute certainty to complete mush, as well as the forces that cause variations in conviction across investments as well as across investors. I then follow up and argue that conviction drives two major investment choices - the sizing of an investment and how much leverage you take, with stronger (weaker) conviction leading to more concentrated (more diversified) portfolios with higher (lower) leverage. I end the session by drawing three lessons from this story: (1) that investment actions (on concentration & leverage) that are out of sync with investment conviction is deadly, (2) that momentum is a force that can upend conviction and (3) that as investor, you will be better off trusting humble money over smart money.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/LessonsfromLeo.pdf

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Session 4 (Val Undergrads): The Architecture of DCFs and Riskfree Rates

Sun, 06 Sep 2026 21:07:00 -0000

I started this class by completing a big picture perspective on discounted cash flow models, noting that while the way we get cash flows, growth rates and discount rates will vary, they are not only tied together with the same principles but require internal consistency. We started then with a discussion of risk and how it plays out in discount rates, before embarking on an assessment of riskfree rates, and with a discussion on whether the Fed sets rates and how to get riskfree rates in currencies where the government has default risk. I did mention, in passing, the possibility of negative riskfree rates and I do have a post on that:
http://aswathdamodaran.blogspot.com/2016/03/negative-interest-rates-unreal.html
If you want to see my updated perspective on risk free rates, try my blog post from this week::
https://aswathdamodaran.blogspot.com/2024/01/data-update-3-for-2024-interest-rates.html

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/riskfree.pdf
https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session4slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session4atest.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session4asoln.pdf

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Session 1: Corporate Finance: What is it?

Sun, 06 Sep 2026 20:32:43 -0000

Introduction to Corporate Finance

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AI's Bar Mitzvah Moment? From Hype and Hope to Business Questions!

Sun, 06 Sep 2026 19:30:00 -0000

It is undeniable that AI has taken over business and investing conversations since ChatGPT's debut on November 30, 2022. In addition to pushing up the market capitalizations of the companies that supply its infrastructure (chips, power, electrical equipment), it has also given rise to the largest investment build-up in history, with $2 trillion spent so far on AI architecture, with more to follow. The debate about AI though has been stunted by people talking past each other, with advocates pointing to its potential market being "huge" and skeptics noting that the "massive" cap ex makes value creation impossible. I much confess that I find myself pulled in a dozen different directions, as the debate unfolds on multiple dimensions (open vs closed models, AI as tool or employee replacement, AI as good or bad for society). This session was really meant for an audience of one (me), and during the session, I try to develop a framework for making sense of AI as a business. In the process, I develop tools that I can use to judge whether Anthropic is worth $2 trillion and whether the hyperscalers can get sufficient payoff from their trillion in AI cap ex. I hope that you find my framework and tools useful.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/AIBusiness.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2026/08/ais-bar-mitzvah-moment-from-hype-hope.html
Spreadsheet: https://pages.stern.nyu.edu/~adamodar/pc/blog/BreakevenEnterprisevalue.xlsx

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Session 19 (MBA): APV and Relative Assessment - Optimal Financing Mix

Sun, 06 Sep 2026 15:07:00 -0000

In this class, we continued our discussion of the cost of capital approach to optimizing debt ratios by looking at the determinants of the optimal. In particular, it was differences in tax rates, cash flows (as a percent of value) and risk that determined why some companies have high optimal debt ratios and why some have low or no debt capacity. We then looked at the Adjusted Present Value (APV) approach to analyzing the effect of debt. In particular, this approach looks at the primary benefit of debt (taxes) and the primary costs (expected bankruptcy) and netted out the difference from the unlevered firm value. If you are interested in trying this out, I have attached an APV spreadsheet which you can use on your company (with your own judgment call on what the indirect bankruptcy cost is as a percent of value). We closed the discussion of optimal by noting that many firms decide how much to borrow by looking their peer group and argued that if you decide to go this route, you should use more of the information than just the average. If you can plug in the numbers for the optimal debt ratio into the optimal capital structure, it would be a giant step forward on your project.
Slides:
http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session19.pdf
APV Spreadsheet: http://www.stern.nyu.edu/~adamodar/pc/apv.xls
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session19test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session19soln.pdf

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Data Update 5 for 2024: Profitability - The End Game for Business?

Sun, 06 Sep 2026 09:07:00 -0000

Following up on my previous data updates, where I looked at the ingredients that moved hurdle rates in 2023, I look at profitability at companies. I start with a defense of profitability and value creation as the end game in business, partly in response to ill-thought through and misconceived notions of stakeholder wealth maximization and its offshoots - sustainability and ESG. I first examine profitability across sectors and regions, by scaling profits to sales (margins) and then by scaling profits to capital invested (accounting returns). I close by comparing these returns to hurdle rates, and concluded that 80% of companies across the globe generated returns that were less than their hurdle rates. If doing good for society requires healthy and profitable companies with surplus profits, delivering those surplus profits is getting harder to do with globalization and disruption.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate5for2024.pdf
Post: https://aswathdamodaran.blogspot.com/2024/01/data-update-5-for-2024-profitability.html

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Valeant: Information Vacuums, Management Credibility and Investment Value

Sat, 05 Sep 2026 03:07:00 -0000

In this session, I take a follow-up look at Valeant, after six months of information blackout, management confusion and legal jeopardy. While the company has not released any information since my November 2015 valuation, I revalue the company to reflect its heightened debt burden and delayed information.
Blog Post on Valeant from November 2015: http://aswathdamodaran.blogspot.com/2015/11/checkmate-or-stalemate-valeants-fall.html
Blog Post from April 2016: http://aswathdamodaran.blogspot.com/2016/04/valeant-information-vacuums-management.html
Slides for this blog post: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/ValeantUpdate.pdf
Spreadsheets with valuations:
Valeant, the star (9/2015): http://www.stern.nyu.edu/~adamodar/pc/blog/ValeantStar.xls
Valeant, the cash cow (11/2015):
http://www.stern.nyu.edu/~adamodar/pc/blog/ValeantCashCow.xls
Valeant, the dog (April 2015):
http://www.stern.nyu.edu/~adamodar/pc/blog/ValeantDog.xls

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Session 20 (Undergraduate): The Cost of Capital and Financing Mix

Wed, 02 Sep 2026 15:07:00 -0000

In this session, we continued our discussion of the cost of capital approach to deriving an optimal financing mix: the optimal one is the debt ratio that minimizes the cost of capital. To estimate the cost of capital at different debt ratios, we estimated the levered beta/ cost of equity at each debt ratio first and then the interest coverage ratio/synthetic rating/cost of debt at each debt ratio, taking care to ensure that if the interest expenses exceeded the operating income, tax benefits would be lost. The optimal debt ratio is the point at which your cost of capital is minimized. Using this approach, we estimated optimal debt ratios for Disney (40%), Tata Motors (20%), Vale (30% with actual earnings, 50% with normalized earnings), Baidu (10%) and Bookscape (30%). Disney was underlevered, Tata Motors was over levered and Bookscape was at its optimal. We closed the class by looking at an extension of the cost of capital approach, which allowed us to bring in expected bankrutpcy costs into the discussion.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session20.pdf
Capital Structure Spreadsheet: http://www.stern.nyu.edu/~adamodar/pc/capstru.xls
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session20atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session20asoln.pdf

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Session 4 (Val MBA): DCF Structure and Risk free Rates!

Wed, 02 Sep 2026 09:07:00 -0000

We started this class with a discussion of structuring a DCF and the different groupings of risk, and why some types of risk matter more than others, before moving on torisk free rates, exploring why risk free rates vary across currencies and what to do about really low or negative risk free rates. The blog post below captures my thoughts on negative risk free rates:
http://aswathdamodaran.blogspot.com/2016/03/negative-interest-rates-unreal.html
If you want to see my updated perspective on risk free rates, try my blog post from this year, built around the inflation question is here:
https://aswathdamodaran.blogspot.com/2024/01/data-update-3-for-2024-interest-rates.html
I know that the notion that the Fed sets interest rates runs deep, and that you will be able find ways of explaining away contrary evidence, if you feel strongly enough, but I would encourage you to keep an open mind on this question,. Way too much money and resources have been wasted because of the Fed obsession over the last decade to not fight back.
Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/riskfree.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session4slides.pdf
Post class test:
https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session4atest.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session4asoln.pdf

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Session 18 (MBA): The Cost of Capital and Optimizing Debt

Wed, 02 Sep 2026 03:07:00 -0000

In this session, we continued our discussion of the cost of capital approach to deriving an optimal financing mix: the optimal one is the debt ratio that minimizes the cost of capital. To estimate the cost of capital at different debt ratios, we estimated the levered beta/ cost of equity at each debt ratio first and then the interest coverage ratio/synthetic rating/cost of debt at each debt ratio, taking care to ensure that if the interest expenses exceeded the operating income, tax benefits would be lost. The optimal debt ratio is the point at which your cost of capital is minimized. Using this approach, we estimated optimal debt ratios for Disney (40%), Tata Motors (20%), Vale (30% with actual earnings, 50% with normalized earnings), Baidu (10%) and Bookscape (30%). Disney was underlevered, Tata Motors was over levered and Bookscape was at its optimal. We closed the class by looking at an extension of the cost of capital approach, which allowed us to bring in expected bankrutpcy costs into the discussion.
Slides:
http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session18.pdf
Capital Structure Spreadsheet: http://www.stern.nyu.edu/~adamodar/pc/capstru.xls
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session18test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session18soln.pdf

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The Mag(nificent) Seven: The Seven Stocks that Saved the Market in 2023!

Tue, 01 Sep 2026 21:07:00 -0000

In 2023, seven stocks (Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla) increased their collective market capitalization by $5.1 trillion, accounting for close to 60% of the increase in market cap of all 6658 stocks. At the end of 2023, these seven companies had a market cap of $12.2 trillion, greater than the market cap of all listed stocks in China, the second biggest equity market in the world. In this session, I look at three reasons for the success of the Mag Seven, ranging from a correction for the beating they took in 2022, extraordinary business economics (growth & profitability) and a shift to winner-take-all (or most) economics in many industries. I close the session by valuing all seven companies, necessitated by the fact that I own all seven (bought at different points in time), and concluding that while all five are close to fairly valued, two (Nvidia and Microsoft) are over valued. That may be either because I don't have the imagination to see the possibilities of AI or because investors are exaggerating its potential to deliver profits.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/MagSeven.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2024/02/the-seven-samurai-how-big-tech-rescued.html
Intrinsic Valuations:
Amazon: https://pages.stern.nyu.edu/~adamodar/pc/blog/Amazon2024.xlsx
Apple: https://pages.stern.nyu.edu/~adamodar/pc/blog/Apple2024.xlsx
Alphabet: https://pages.stern.nyu.edu/~adamodar/pc/blog/Google2024.xlsx
Meta: https://pages.stern.nyu.edu/~adamodar/pc/blog/Meta2024.xlsx
Microsoft: https://pages.stern.nyu.edu/~adamodar/pc/blog/MSFT2024.xlsx
Nvidia: https://pages.stern.nyu.edu/~adamodar/pc/blog/NVIDIA2024.xlsx
Tesla: https://pages.stern.nyu.edu/~adamodar/pc/blog/TeslaJan2024DIY..xlsx

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Session 19 (Undergraduate): More on the debt trade off and the cost of capital approach

Tue, 01 Sep 2026 15:07:00 -0000

In this session, we continued discussing the trade off on debt. We started with the Miller Modigliani theorem and then continued by looking at the financing hierarchy and the cost of capital approach for optimizing debt.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session19.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session19atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session19asoln.pdf

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Session 6 (Val Undegrads): Implied Equity Risk Premiums and First Steps on Relative Risk

Tue, 01 Sep 2026 09:07:00 -0000

(I am sorry but I had to reload this file. The previous one had issues with the slides)
In this session, we started by doing a brief test on the relationship between prices and risk premiums. We spent the rest of the class about the dynamics of implied equity risk premiums and what makes them go up, down or stay unchanged. We then moved to cross market comparisons, first by comparing the ERP to bond default spreads, then bringing in real estate risk premiums and then extending the concept to comparing ERPs across countries. Finally, I made the argument that you should not stray too far from the current implied premium, when valuing individual companies, because doing so will make your end valuation a function of what you think about the market and the company. If you have strong views on the market being over valued or under valued, it is best to separate it from your company valuation. I am attaching the excel spreadsheet that I used to compute the implied ERP at the start of February 2024. Play with it when you get a chance. Post class test and solution attached. I have also attached the weekly challenge for this week, which is built around implied equity risk premiums. If you get a chance, try it.
ERP for February: https://pages.stern.nyu.edu/~adamodar/pc/implprem/ERPFeb24.xlsx
Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/RiskShort.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session6slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session6Atest.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session6Asoln.pdf

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Session 17 (MBA): The MM Theorem and Cost of capital approach

Tue, 01 Sep 2026 03:07:00 -0000

In this session, I look at the Miller Modigliani theorem through the prism of the debt tradeoff. I then move on to looking at how the cost of capital can be used to optimize the right mix of debt and equity.
Slides:
http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session17.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session17Atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session17Asoln.pdf

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Session 5: End Game Closure and First Steps on Risk

Mon, 31 Aug 2026 21:07:00 -0000

We started the class by wrapping up the question of at the end game in business, and why I (and you don’t have have to) still trust markets, over managers and expert panels. Markets have no ego, and if allowed to play out, will devise corrections to almost every over reach in business, whether it be managers taking advantage of shareholders, borrowers ripping off lenders, companies lying to markets or creating large social costs. My view is that companies should run to maximize value, but that will involve accepts self-constraints on behavior, and even if the market does not recognize it right away, but that managers need to consider the messages in stock prices. We then moved on to risk and some of you may be regretting the shift from the soft stuff , but trust me that it is still fun.. If it is not, keep telling yourself that it will become fun. Anyway, here are a few thoughts about today's class.
The Essence of Risk: There has been risk in investments as long as there have been investments. If you have the time, pick up a copy of Against the Gods by Peter Bernstein, John Wiley and Sons. It is a great book and an easy read. If you want more, you should also pick up a copy of Capital Ideas by Peter as well... That traces out the development of the CAPM....
More on Models: If you want to read more about the CAPM, you can begin with chapter 3 in the book. It provides an extended discussion of what we talked about in class today....
Diversifiable versus non-diversifiable risk: The best way to understand diversifiable and non-diversifiable risk is to take your company and consider all of the risks that it is exposed to and then categorize these risks into whether they are likely to affect just your company, your company and a few competitors, the entire sector or the overall market.

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session5slides.pdf
Post class test 1: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session5atest.pdf
Post class test 1 solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session5asoln.pdf
(If these links don't work, try a different browser...)

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Session 18 (Undergraduate): The Debt Trade off (continued)

Mon, 31 Aug 2026 15:07:00 -0000

In this shortened session (after the quiz), we continued looking at the pluses and minuses of borrowing, starting with the added discipline it may bring to some companies and continuing with bankruptcy cost and agency costs.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session18.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session18atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session18asoln.pdf

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Session 5 (Val MBAs): Closure on Riskfree Rates and First Steps on Equity Risk Premiums

Mon, 31 Aug 2026 09:07:00 -0000

In this session, we started by doing a brief test on country risk premiums. We started with an assessment of historical equity risk premiums, and why they are not good predictors of future equity risk premiums, before embarking on a discussion of country risk and how to deal with it, and measure it. We also looked at company risk exposure to country risk, with my core argument being that a company’s exposure to country risk comes from where it dos business, not where it is incorporated: After a brief foray into lambda, a more composite way of measuring country risk, we ended the session by talking about how you can estimate a forward-looking, dynamic equity risk premium.
Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/risk.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session5slides.pdf
Post class test:
https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session5Atest.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session5Asoln.pdf

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Session 16: The Trade off on Debt

Mon, 31 Aug 2026 03:07:00 -0000

In today's class, we started our discussion of the financing question by drawing the line between debt and equity: fixed versus residual claims, no control versus control, and then used a life cycle view of a company to talk about how much it should borrow. We then started on the discussion of debt versus equity by looking at the pluses of debt (tax benefits, added discipline) and its minuses (expected bankruptcy costs, agency cost and loss of financial flexibility). Even with the general discussion, we were able to look at why firms in some countries borrow more than others, why having more stable earnings can make a difference in how much you can borrow and why having intangible assets can affect your borrowing capacity.
Slides:
http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session16.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session16AXtest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session16AXsoln.pdf

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Session 7 (Val Undergrads): Alternatives to Beta,, Cost of Equity and Cost of Debt

Sun, 30 Aug 2026 21:07:00 -0000

In this s class, we started by reviewing the pitfalls of regression betas. They are backward-looking, noisy and subject to game playing. We went on to talk about bottom up betas, focusing on defining comparable firms and expanding the sample. I did make a big deal about bottom up betas, but may have still not convinced you or left you hazy about some of the details. If so, I thought it might be simpler to just send you a document that I put together on the top ten questions that you may have or get asked about bottom up betas. I think it covers pretty much all of the mechanics of the estimation process, but I am sure that I have missed a few things.
http://www.stern.nyu.edu/~adamodar/New_Home_Page/TenQs/TenQsBottomupBetas.htm
We also initiated the discussion of the cost of debt, defining it to be the rate at which companies can borrow long term, today and in the next session, we will complete our discussion of cost of capital. After that, cash flows, here we come!.
Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/Beta.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session7slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session7Atest.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session7Asoln.pdf

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Session 17 (Undergraduate): The Netflix Studio - Case Discussion

Sun, 30 Aug 2026 15:07:00 -0000

The bulk of today's class was spent on the Netflix Studio case. While the case itself will soon be forgotten (as it should), This case covers a gamut of issues that arise in almost any investment analysis from sunk costs to what to do about allocations to the essence of incremental cash flows.
Case: http://www.stern.nyu.edu/~adamodar/pdfiles/cfexams/NetflixContent.pdf
Presentation: http://www.stern.nyu.edu/~adamodar/pdfiles/cfexams/StudioPresentation.pdf
Excel spreadsheet with analysis: http://www.stern.nyu.edu/~adamodar/pdfiles/cfexams/NetflixContentsoln.xls
Slides (For last part of class): http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session17.pdf

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Session 6: Risk - From Models to Inputs

Sun, 30 Aug 2026 09:07:00 -0000

We started today’s class by tying up the last loose ends with risk and return models, talking about how assuming that there are no transactions costs and private information can lead us all to hold the market portfolio, and how risk can be then measured as risk added to that portfolio. We did damn the CAPM with faint praise, arguing that it does not do very well at explaining differences in returns across companies, but that it does at least as well as the alternatives. We then started on the mechanics of the model, taking about risk free rates: how to estimate the risk free rate in a currency where there is no default free entity issuing bonds in that currency and why risk free rates vary across currencies. The key lesson is that much as we would like to believe that riskfree rates are set by banks, they come from fundamentals - growth and inflation. I have a post on risk free rates that you might find of use:
http://aswathdamodaran.blogspot.com/2015/04/dealing-with-low-interest-rates.html
In fact, risk free rates turned negative in a few currencies, upending what we know about risk free rates in. Here is my post on negative risk free rates.
http://aswathdamodaran.blogspot.com/2016/03/negative-interest-rates-unreal.html
In the final few minutes of the session, we turned to equity risk premiums and how they are related to risk aversion.

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session6slides.pdf
Post class test 1: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session6atest.pdf
Post class test 1 solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session6asoln.pdf
(If these links don't work, try a different browser...)

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Session 15 (MBA): Netflix Case and Closing the Books on Investment Analysis

Sun, 30 Aug 2026 03:07:00 -0000

The bulk of today's class was spent on the Netflix Studio case. While the case itself will soon be forgotten (as it should), I hope that some of the issues that we talked about today stay fresh. I have put the presentation and excel spreadsheet with my numbers online:
Presentation: http://www.stern.nyu.edu/~adamodar/pdfiles/cfexams/StudioPresentation.pdf
Excel spreadsheet with analysis: http://www.stern.nyu.edu/~adamodar/pdfiles/cfexams/NetflixContentsoln.xls
Please download them.

In the last part of the class, we tied up some loose ends relating to investment analysis, starting with valuing side benefits and synergies and then taking a big picture perspective of the options that are often embedded in project analysis that may lead us to take negative NPV investments.
Slides:
http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session15.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session16atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session16asoln.pdf

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Session 6 (Val MBAs): Implied Equity Risk Premiums and Betas

Sat, 29 Aug 2026 21:07:00 -0000

In today’s class, we started by looking at implied equity risk premiums, why they move over time and how they are related to the prices of risk in other risky asset classes (bond and real estate). We then reviewed the pitfalls of regression betas. They are backward-looking, noisy and subject to game playing. We went on to talk about bottom up betas, focusing on defining comparable firms and expanding the sample. I did make a big deal about bottom up betas, but may have still not convinced you or left you hazy about some of the details. If so, I thought it might be simpler to just send you a document that I put together on the top ten questions that you may have or get asked about bottom up betas. I think it covers pretty much all of the mechanics of the estimation process, but I am sure that I have missed a few things.
http://www.stern.nyu.edu/~adamodar/New_Home_Page/TenQs/TenQsBottomupBetas.htm

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/RiskShort.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session6slides.pdf
Post class test:
https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session6test.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session6soln.pdf

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Session 16 (Undergraduate): Options in Projects and First Steps on Debt

Sat, 29 Aug 2026 15:07:00 -0000

In this session, we completed our discussion of investment analysis by first looking at valuing synergy and then at the options to delay, expand and abandon projects. We then started on the trade off between debt and equity by looking at their various forms.

Slides (Part 1): http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session16.pdf
Slides (Part 2): http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session16a.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session16atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session16asoln.pdf

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Session 8 (Val Undergrads): Cost of Capital and First Steps on Cash Flows

Sat, 29 Aug 2026 09:07:00 -0000

In today’s class, we started with the cost of debt and computing debt ratios for companies and how to deal with hybrid securities.. If you are interested in getting updated default spreads (on the cheap or free), try the Federal Reserve site in St. Louis:
https://fred.stlouisfed.org
These are spreads on indices created by rating, updated daily. Neat, right? We then moved on to earnings and cash flow’s and after a introduction to cash flows, I promised you a link to the post on Microsoft where I talk about the differences in free cash flows:
https://aswathdamodaran.blogspot.com/2022/10/earnings-and-cash-flows-primer-on-free.html
We ended the class by noting that leases are debt, and while accountants should always treated them as such, they came to their senses in 2019. With R&D, I am afraid that accountants have still not come to their senses, and we are stuck with having to do the correction ourselves.. .

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/cftests.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session8slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session8Btest.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session8Bsoln.pdf

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Session 14 (MBA): To NPV and beyond..

Sat, 29 Aug 2026 03:07:00 -0000

We started today's class by looking at mutually exclusive investments and why NPV and IRR may give you different answers: a project can have more than one IRR, IRR is biased towards smaller projects and the intermediate cash flows are assumed to be reinvested at the IRR. As to which rule is better, while NPV makes more reasonable assumptions about reinvestment (at the hurdle rate), companies that face capital rationing constraints may choose to use IRR. We then compared projects with different lives and considered how best to incorporate side costs and side benefits into investment analysis.

Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session14.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session14test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session14soln.pdf

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Valuation Modeling: Excel as a tool

Fri, 28 Aug 2026 21:07:00 -0000

Excel is a powerful tool, but in our zeal to test out its many powers, we often overuse, and spend far too much time thinking about modeling and too little about business and valuation first principles. I do have a base valuation spreadsheet that I use to value almost every non-financial service company, and over time I have added some bells and whistles. That said, at its core it remains a simple spreadsheet, with no macros or Excel functions. In this session, I provide a link to the spreadsheet and how to use in valuing company, going input cell by input cell. (I am sorry if my voice sounds ragged, but I have a scratchy throat (nope.. Not COVID) and just got off a long flight.)
Spreadsheet: https://pages.stern.nyu.edu/~adamodar/pc/fcffsimpleginzu.xlsx

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Session 15 (Undergraduate): NPV vs IRR, Side Costs and Side Benefits

Fri, 28 Aug 2026 15:07:00 -0000

We started today's class by looking at whether you should hedge risk and came to a mixed conclusion about when it makes sense. We closed the investment analysis by looking at an acquisition as a big investment. We then turned our attention to mutually exclusive investments and why NPV and IRR may give you different answers: a project can have more than one IRR, IRR is biased towards smaller projects and the intermediate cash flows are assumed to be reinvested at the IRR. As to which rule is better, while NPV makes more reasonable assumptions about reinvestment (at the hurdle rate), companies that face capital rationing constraints may choose to use IRR. We closed by comparing projects with different lives and considered how best to incorporate side costs and side benefits into investment analysis.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session15.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session15atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session15asoln.pdf

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Too Big a Risk? Catastrophic Risks in Business and Investing

Fri, 28 Aug 2026 09:07:00 -0000

Whilet businesses and investors are continuously exposed to many risks, there is a sub-category of risks that are rare, but if they do occur, can have devastating consequences. This session looks at those catastrophic risks, breaking them down first on source (nature, man-made, regulatory/legal), locus of damage (one business, a few businesses, an entire sector, the entire economy) and then looking at how to incorporate those risks into business value. While their effects can show up in every input into valuation, I present a flowchart for deciding the right place to show catastrophic risks, based upon whether they are insurable or not, and whether they affect a few firms, the sector or the market. I close the session at how markets price these risks, arguing that they swing between denial (when the risks are distant) to panic (when they are imminent).
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/CatRisk.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2024/02/catastrophic-risk-investing-and.html

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Session 13 (MBA): Time Weighted CF returns, Uncertainty and Equity Analysis

Fri, 28 Aug 2026 03:07:00 -0000

In today's session, we started by looking at two time-weighed cash flow returns, the NPV and IRR. We then looked at three tools for dealing with uncertainty: payback, where you try to get your initial investment back as quickly as possible, what if analysis, where the key is to keep it focused on key variables, and simulations, where you input distributions for key variables rather than single inputs. Ultimately, though, you have to be willing to live with making mistakes, if you are faced with uncertainty. We then turned our attention to analyzing a project in equity terms, using a Vale iron ore mine in Canada and in the process faced the question of whether we should hedge risk either at the output or input levels.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session13.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session13test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session13soln.pdf

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Session 7: Implied and Country Equity Risk Premiums

Thu, 27 Aug 2026 21:07:00 -0000

Thi's class was spent talking mostly about equity risk premiums. The key theme to take away is that equity risk premiums don't come from models or history but from our guts. When we (as investors) feel scared or hopeful about everything that is going on around us, the equity risk premium is the receptacle for those fears and hopes. Thus, a good measure of equity risk premium should be dynamic and forward looking. We looked at three different ways of estimating the equity risk premium. It is with this objective in mind that we computed an implied equity risk premium for the S&P 500, using the level of the index. If you want to try your hand at it, here is my February 2024 update:
http://www.stern.nyu.edu/~adamodar/pc/implprem/ERPFeb24.xlsx
Play with the spreadsheet. In fact, try it with today’s index level and T.Bond rate and see what the ERP is right now. I also noted the path of historical implied equity risk premiums, and how they have become more unstable and higher since 2008, mentioning a greater fear of catastrophic risks than ever before. If you are interested in this topic, I wrote a piece about it last week:
https://aswathdamodaran.blogspot.com/2024/02/catastrophic-risk-investing-and.html
I then extended this approach into other markets, and talked about how to (and tried to) estimate equity risk premiums for other markets, using the country ratings (default spreads) as a building block. You can get my 2024 start-of-the-year equity risk premiums at this link:
https://pages.stern.nyu.edu/~adamodar/pc/datasets/ctryprem.xlsx
As a final step, see if you can find the geographic revenue distribution for your company. You can then use my latest ERP update to get the ERP for your company. If you can find production exposure, even better. You will then have to decide whether you want ERPs based upon production, revenues or a composite of the two.

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session7slides.pdf
Post class test 1: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session7atest.pdf
Post class test 1 solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session7asoln.pdf
(If these links don't work, try a different browser...)

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Session 14 (Undergraduate): Time Weighted Returns and Equity Analysis

Thu, 27 Aug 2026 15:07:00 -0000

In today's session, we started by looking at two measures of time-weighted cash flow returns, NPV and IRR. We then looked at three tools for dealing with uncertainty: payback, where you try to get your initial investment back as quickly as possible, what if analysis, where the key is to keep it focused on key variables, and simulations, where you input distributions for key variables rather than single inputs. Ultimately, though, you have to be willing to live with making mistakes, if you are faced with uncertainty. We then turned our attention to analyzing a project in equity terms, using a Vale iron ore mine in Canada and in the process faced the question of whether we should hedge risk either at the output or input levels.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session14.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session14atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session14asoln.pdf

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Session 7 (Val MBAs): Cost of Capital Closure and First Steps on cash flows

Thu, 27 Aug 2026 09:07:00 -0000

In this class, we started by completing our rationale for using bottom up betas, instead of a single regression beta, and continued with the cost of debt and computing debt ratios for companies and how to deal with hybrid securities.. If you are interested in getting updated default spreads (on the cheap or free), try this site:
https://content.naic.org/pbr_data.htm
Click on PBR and that link will give you end spreads, they do update the numbers monthly, but seem to do an awfully poor job of making the spreadsheet findable. You can also try the St. Louis FRED and find updated on seven major ratings classes (AAA, AA, A, BBB, BB, B, C and lower) updated daily. Neat, right? You can get the spreads from Bloomberg as well, using the FIW function, and tweaking the choices to show all corporate spreads. We then started on our discussion of free cashflows, with an examination of the differences between free cash flows to equity and free cash flow to the firm. If you are still confused, I do have a post on free cash flows that I did a couple of years ago that might help:
https://aswathdamodaran.blogspot.com/2022/10/earnings-and-cash-flows-primer-on-free.html

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/cftests.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session7slides.pdf
Post class test:
https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session7test.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session7soln.pdf

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Session 12 (MBA): Earnings to Cash flows to Incremental Cash Flows

Thu, 27 Aug 2026 03:07:00 -0000

In this session, we started by stating our ideal measure of return: it should be based upon cash flows, focus on just the incremental and be time weighted. After defining project broadly as including any type of investment, small or large, revenue generating or cost cutting, we started on the Rio Disney theme park analysis. We laid out the initial costs for the theme park and the assumptions about expenses, both direct and allocated. We began the class today by extending the return on capital concept to entire companies and argued that notwithstanding its accounting limitations, comparing the return on capital to the cost of capital provides us with a basis for measuring whether a company’s existing investments are good (or not). We then returned to the Rio Disney analysis and moved from earnings to cash flows, by making three standard adjustments: add back depreciation & amortization (which leaves the tax benefit of the depreciation in the cash flows), subtract out cap ex and subtract out changes in working capital. Finally, we introduced the key test for incremental cash flows by asking two questions: (1) What will happen if you take the project and (2) What will happen if you do not? If the answer is the same to both questions, the item is not incremental. That is why "sunk" costs, i.e., money already spent, should not affect investment decision making. It is also the reason that we add back the portion of allocated G&A that is fixed and thus has nothing to do with this project. I have attached the post class test for today, with the solution.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session12.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session12test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session12soln.pdf

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Session 9 (Val Undergrads): More on cash flows

Wed, 26 Aug 2026 21:07:00 -0000

In this session, we began by looking at broad definitions of cash flows, before embarking on updating, normalizing and cleaning up accounting earnings. In particular, we talked about why we capitalize R&D expenses, and how they affect valuation inputs. We continued our discussion of cash flows, by first putting to rest some final issues on earnings, including the tax rate to use in computing after-tax cash flows and dealing with money losing companies. In the process, we did look at what to do about accounting fraud, and while the answer is not much, there may be a role for forensic accounting. To be honest, most forensic accounting books are designed for valuation morticians, but here are a couple that you may find useful:
http://www.amazon.com/Financial-Shenanigans-Accounting-Gimmicks-Reports/dp/0071703071/ref=pd_sim_b_8
http://www.amazon.com/Creative-Cash-Flow-Reporting-Sustainable/dp/0471469181/ref=pd_sim_b_2

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/cftests2.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session9slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session9Btest.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session9Bsoln.pdf

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Negative Interest rates: Impossible, Irrational or Just Unusual

Wed, 26 Aug 2026 15:07:00 -0000

As central banks continue to lower the interest rates that they control, the zero bound no longer seems to be an impediment. Negative interest rates boggle the mind and this is my attempt to make sense of the phenomena and move on.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/NegativeIntRates.pdf
Blog Post: http://bit.ly/2294NhR

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Session 8: Betas and Beyond!

Wed, 26 Aug 2026 09:07:00 -0000

In this class, we first covered the estimation choices for betas: how far back in time to go (depends on how much your company has changed), what return interval to use (weekly or monthly are better than daily), what to include in returns (dividends and price appreciation) and the market index to use (broader and wider is better). We also looked at the three key pieces of output from the regression:
1. The intercept: This is a measure of how good or bad an investment your stock was during the period of your regression. To compute the measure correctly, you net out Rf(1-Beta) from the Intercept:
Jensen's alpha = Intercept - Riskfree rate (1- Beta)
If this number is a positive (negative) number, your stock did better (worse) than expected, after adjusting for risk and market performance.
2. The slope: is the beta, albeit with standard error
3. The R squared: measures the proportion of the risk in your stock that is market risk, with the balance being firm specific/diversifiable risk.
Finally, we used the beta to come up with an expected return for stock investors/cost of equity for the company, and talked about how it can be used in investment decision making.

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session8slides.pdf
Post class test 1: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session8atest.pdf
Post class test 1 solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session8asoln.pdf
(If these links don't work, try a different browser...)

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Session 13: From Earnings to Incremental Cash Flows - A Journey

Wed, 26 Aug 2026 03:07:00 -0000

We began the class today by extending the return on capital concept to entire companies and argued that notwithstanding its accounting limitations, comparing the return on capital to the cost of capital provides us with a basis for measuring whether a company’s existing investments are good (or not). If you are interested and want some light reading material for your flight to Jamaica (which is where I am sure you are going for Spring break), try this absolutely scintillating, cannot-be-put-down, amazing (not, not and definitely not) blog post that I put up at the start of this year on the topic:
http://aswathdamodaran.blogspot.com/2016/01/january-2016-data-update-5-making-case.html
We then returned to the Rio Disney analysis and moved from earnings to cash flows, by making three standard adjustments: add back depreciation & amortization (which leaves the tax benefit of the depreciation in the cash flows), subtract out cap ex and subtract out changes in working capital. Finally, we introduced the key test for incremental cash flows by asking two questions: (1) What will happen if you take the project and (2) What will happen if you do not? If the answer is the same to both questions, the item is not incremental. That is why "sunk" costs, i.e., money already spent, should not affect investment decision making. It is also the reason that we add back the portion of allocated G&A that is fixed and thus has nothing to do with this project.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session13.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session13atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session13asoln.pdf

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Session 8 (Val MBAS): More on cash flows

Tue, 25 Aug 2026 21:07:00 -0000

We continued our discussion of earnings and cash flows, starting with an examination of how best to update earnings and correct them for the mistreatment of some financial expenses as operating expenses (leases were the biggest, but accounting has come to its senses) and some capital expenses as operating expenses (R&D is a prime example) We then dealt with some final issues on earnings, including the tax rate to use in computing after-tax cash flows and dealing with money losing companies. In the process, we did look at what to do about accounting fraud, and while the answer is not much, there may be a role for forensic accounting. To be honest, most forensic accounting books are designed for valuation morticians, but here are a couple that you may find useful:
http://www.amazon.com/Financial-Shenanigans-Accounting-Gimmicks-Reports/dp/0071703071/ref=pd_sim_b_8
http://www.amazon.com/Creative-Cash-Flow-Reporting-Sustainable/dp/0471469181/ref=pd_sim_b_2
We then moved on to examine broad questions about what to include in capital expenditures and working capital.

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/cftests2.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session8slides.pdf
Post class test:
https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session8Atest.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session8Asoln.pdf

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Session 11 (MBA): Cost of Capital and First Steps on Investment Analysis

Tue, 25 Aug 2026 15:07:00 -0000

We started the class by completing the last pieces of the cost of capital puzzle: coming up with market values for equity (easy for a publicly traded company) and debt (more difficult). We then began our discussion of returns by emphasizing that the bottom line in corporate finance is cash flows, not earnings, that we care about when those cash flows occur and that we try to bring in all side costs and benefits into those cash flows. Defining investments broadly to include everything from acquisitions to big infrastructure investments to changing inventory policy, we set the table for investment analysis by setting up the Rio Disney investment. We will return to flesh out the details in the next session (after the break).
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session11.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session11test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session11soln.pdf

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Session 10 (Val Undergrads): Free Cashflows to Equity and First Steps on Growth

Tue, 25 Aug 2026 09:07:00 -0000

In this session, we started by completing our discussion of FCFE and how it varies over a corporate life cycle, and then looked at three approaches to estimating growth - a historical growth rate, where you look at past growth, outsourcing growth to analysts or managers and sustainable growth, where you tie growth to how much a company is reinvesting and how well it is reinvesting. Ultimately, you have to find the right mix of historical data, industry trends and your assessment of the company in forecasting growth, and letting uncertainty stop you is not an option.

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/growthrate.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session10slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session10Atest.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session10Asoln.pdf

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Session 12 (Undergraduate): Show me the money (Measuring Investment Returns)

Tue, 25 Aug 2026 03:07:00 -0000

Today's class represented a transition from hurdle rates to measuring returns. We started by completing the last pieces of the cost of capital puzzle: coming up with market values for equity (easy for a publicly traded company) and debt (more difficult). We then began our discussion of returns by emphasizing that the bottom line in corporate finance is cash flows, not earnings, that we care about when those cash flows occur and that we try to bring in all side costs and benefits into those cash flows. Defining investments broadly to include everything from acquisitions to big infrastructure investments to changing inventory policy, we set the table for investment analysis by setting up the Rio Disney investment.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session12.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session12atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session12asoln.pdf

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Session 9: Beta Determinants and Bottom up Betas

Mon, 24 Aug 2026 21:07:00 -0000

In this, we looked past regression betas at how the choices companies make about the businesses they enter can determine their betas.. Summarizing the class, here is what we listed as the three determinants of betas:
1. Betas are determined in large part by the nature of your business. While I am not an expert on strategy, marketing or productions, decisions that you make in those disciplines can affect your beta. Thus, your decision to go for a price leader as opposed to a cost leader (I hope I am getting my erminology right) or build up a brand name has implications for your beta. As some of you probably realized today, the discussion about whether your product or service is discretionary is tied to the elasticity of its demand (an Econ 101 concept that turns out to have value)... Products and services with elastic demand should have higher betas than products with inelastic demand. And if you do get a chance, try to make that walk down Fifth Avenue...
2. Your cost structure matters. The more fixed costs you have as a firm, the more sensitive your operating income becomes to changes in your revenues.
3. Financial leverage: When you borrow money, you create a fixed cost (interest expenses) that makes your equity earnings more volatile. Thus, the equity beta in a safe business can be outlandishly high if has lots of debt.
We ended the class by using the betas are "weighted average" concept to compute the beta after an acquisition and a bottom up beta for Disney as a company.

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session9slides.pdf
Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session9test.pdf
Post class testsolution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session9soln.pdf
(If these links don't work, try a different browser...)

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Session 10 (MBA): Private Company Betas, Debt and its Cost

Mon, 24 Aug 2026 15:07:00 -0000

After the quiz, we started today's shortened class today by looking at how betas and costs of equity have to be adjusted for private companies, where the owners and potential buyers may not be diversified. We then moved on to what makes debt different from equity, and using that definition to decide what to include in debt, when computing cost of capital. Debt should include any item that gives rise to contractual commitments that are usually tax deductible (with failure to meet the commitments leading to consequences). Using this definition, all interest bearing debt and lease commitment meet the debt test but accounts payable/supplier credit/ underfunded pension obligations do not. We followed up by arguing that the cost of debt is the rate at which you can borrow money, long term, today and then looked at ways of coming up with that number from the easy scenarios (where a company has a bond rating) to the more difficult ones (where you have only non-traded debt and bank loans and no rating).
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session10.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session10test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session10soln.pdf

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Session 9 (Val MBA): FCFE and Growth Rates

Mon, 24 Aug 2026 09:07:00 -0000

In the session, which occurred after the quiz, we started on our assessment of growth rates, starting with historical growth rates, before looking at analysts estimates of growth and why they do not carry more predictive power (given that analysts often are immersed in company-specific knowledge and have access to management). Next week, we will look at tying growth to two fundamental questions: (1) how much companies reinvest and (2) how well.
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session9slides.pdf
No start of the class or post-class test!

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Review for Quiz 1 (MBA)

Mon, 24 Aug 2026 03:07:00 -0000

This session provides a review for the first quiz in the class, which covers the first nine sessions.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/reviewQuiz1.pdf
Past Quiz 1s: http://www.stern.nyu.edu/~adamodar/pdfiles/cfexams/prqz1.pdf
Past Quiz 1 solutions: http://www.stern.nyu.edu/~adamodar/pdfiles/cfexams/prqz1sol.xls

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Session 11 (Val Undergrads): Sustainable (Fundamental) Growth

Sun, 23 Aug 2026 21:07:00 -0000

n the session, which occurred after the quiz i, we looked at sustainable growth (or fundamental growth), which ties growth to how much you reinvest and how well you reinvest, with variants for earnings per share (retention ratio, ROE), net income from operations (equity reinvestment rate, non-cash ROE) and operating income (reinvestment rate, return on capital). We then started on a more general way of estimating future cash flows, starting with revenue growth. The weekly challenge for this week, if you feel up for it, centers on fundamental growth.

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session11slides.pdf
No post-class or start of the class test for this session.

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Session 9 (MBA): Add on to explain bottom up beta

Sun, 23 Aug 2026 15:07:00 -0000

In this session, I go through the process of estimating betas sequentially using the Disney Movie business in 2013 as an example.
Excel: http://www.stern.nyu.edu/~adamodar/pc/DisneyMovieBeta.xlsx

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Session 10: Bottom up Betas - Private Businesses

Sun, 23 Aug 2026 09:07:00 -0000

In this quiz-shortened class, we started by looking at the process of estimating betas for the remaining public companies in the mix, with financial service companies being treated a little differently, because debt is impossible to nail down, and levering and unlevering betas is tough to do. We also examined how to estimate the cost of equity of a private company, and why it may be higher than an otherwise equivalent public company.
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session10slides.pdf
Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session10test.pdf
Post class testsolution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session10soln.pdf
(If these links don't work, try a different browser...)

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Session 11(Undergraduate): Debt and its cost

Sun, 23 Aug 2026 03:07:00 -0000

In this session, I look at what to include in debt and the cost of that debt.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session11.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session11atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session11asoln.pdf

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Session 10 (Val MBA): More on Growth!

Sat, 22 Aug 2026 21:07:00 -0000

If today’s class seemed to pass by in a blur, it is because we covered a lot during the class. We began with a look at why equity research promises so much and delivers so little, and in that context, I thought you might find it interesting to see the analysts who showed on the Institutional Investors’ All America Team last year:
https://www.institutionalinvestor.com/article/2ccm1e0hpe37pla4uuh34/research/the-new-stars-of-the-52nd-annual-all-america-research-team
We then moved into discussion of fundamental growth rates, starting with non-cash net income and then moving on to operating income. I mentioned that incredibly boring paper that I have on accounting returns, and if you want to be bored and perhaps sleep better, here is the link:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1105499
It is guaranteed to work better than a sleeping pill!
We then looked at the more general question of how to estimate growth and cash flows, when margins are changing. In particular, I used Airbnb’s IPO valuation as an illustrative example. If you are interested in getting more detail on my reasoning, you can try this post that I had at the time of the IPO:
https://aswathdamodaran.blogspot.com/2020/12/the-sharing-economy-come-home-ipo-of.html

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/growthrate2.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session10slides.pdf
Post class test:
https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session10Atest.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session10Asoln.pdf

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Session 9 (MBA): Bottom up Betas

Sat, 22 Aug 2026 15:07:00 -0000

In this session, we looked at how to estimate the beta for not only a company but its individual businesses by building up to a beta, rather than trusting a single regression. With Disney, we estimated a beta for each of the five businesses it was in, a collective beta for Disney's operating businesses and a beta for Disney as a company (including its cash).
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session9.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session9test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session9soln.pdf

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Session 12 (Val Undergrad): Value Inputs and Terminal Value

Sat, 22 Aug 2026 09:07:00 -0000

In this session, we first looked at the three key inputs that determine value - revenue growth, operating margins and sales to capital ratios and how best to estimate them. We then looked at the elephant in the DCF room, the terminal value, and laid out broad constraints that keep it in check. In furtherance of that discussion, I would like you take a look at five posts that I had on terminal value on my blog that cover the spectrum of questions related to it:
1. https://aswathdamodaran.blogspot.com/2016/11/myth-51-if-you-don-believe-in-forever.html
2. https://aswathdamodaran.blogspot.com/2016/11/myth-52-as-g-rto-infinity-and-beyond.html
3. https://aswathdamodaran.blogspot.com/2016/11/myth-53-growth-is-good-more-growth-is.html
4. https://aswathdamodaran.blogspot.com/2016/11/myth-54-negative-growth-rates-forever.html
5. https://aswathdamodaran.blogspot.com/2016/11/myth-55-terminal-value-ate-my-dcf.html
None of these posts is earth shattering, but collectively they can give you a sense of what to keep in mind with the terminal value calculation.
Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/termvalue.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session12slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session12Btest.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session12Bsoln.pdf

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Quiz 1: Review Session (Undergraduate)

Sat, 22 Aug 2026 03:07:00 -0000

In this session, I cover the material for the first 10 sessions, which will be covered on the first quiz.
Slides: http://www.stern.nyu.edu/~adamodar/pptfiles/acf3E/reviewQuiz1.ppt
Past Quiz 1s: http://www.stern.nyu.edu/~adamodar/pdfiles/cfexams/prqz1.pdf
Past Quiz 1 solutions: http://www.stern.nyu.edu/~adamodar/pdfiles/cfexams/prqz1sol.xls

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Session 11: Costs of Debt and Capital

Fri, 21 Aug 2026 21:07:00 -0000

In this class, we started by looking at estimating a cost of debt, specifying that it is the cost of borrowing money long term, today. Finally, w explained our preferences for market value weights on debt and equity in a cost of capital calculation, arguing that market value weights trump book value weights every single time. For the market value of debt, we argued for including both interest bearing debt converted to market value and the present value of lease commitments. To get a cost of debt, you need a bond rating (actual or synthetic) as well as default spreads that go with these ratings. The former should be available for your company, if it is rated. If not, use the following spreadsheet to rate your company:
http://www.stern.nyu.edu/~adamodar/pc/ratings.xls
It comes with a lease converter, if you want to use it. The default spreads used to be accessible online for free at bondsonline.com, but it seems to be defunct. You can get default spreads for key ratings classes (AAA, AA, A, BBB, BB, B and CCC & below) from the Federal Reserve website in St. Louis.
https://fred.stlouisfed.org/searchresults/?st=option%20adjusted%20spread
While you may have to extrapolate from these numbers for intermediate ratings, it is eminently doable. Alternatively, you can get updated spreads for every ratings class from a Bloomberg terminal by typing in FIW, and resetting a couple of inputs. Assuming you can get access to a Bloomberg terminal, I put together a quick guide on how to get updated default spreads (for companies and countries):
https://youtu.be/1W_E8NrwCYE
Fiinally, I discovered the NAIC also produces a monthly update on default spreads that is easy to work with and the link to the site is below:
https://content.naic.org/pbr_data.htm
Click on the current year’s tables, and then on Table F&G Current Spreads.

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session11slides.pdf
Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session11test.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session11soln.pdf
(If these links don't work, try a different browser...)

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Session 10 (Undergraduate): Bottom Up Betas

Fri, 21 Aug 2026 15:07:00 -0000

In this session, we at how to estimate the beta for not only a company but its individual businesses by building up to a beta, rather than trusting a single regression. With Disney, we estimated a beta for each of the five businesses it was in, a collective beta for Disney's operating businesses and a beta for Disney as a company (including its cash). We closed the session by extending the concept to private businesses
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session10.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session10atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session10asoln.pdf

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Session 11 (Val MBA): More on Value Inputs and Terminal Value

Fri, 21 Aug 2026 09:07:00 -0000

In this class, we spent some time on the key value drivers - revenue growth, operating margins and sales to capital, before tying up loose ends on terminal value, with the dangers of waiting too long to put your company into stable growth and the importance of long term excess returns in determining terminal value. If yo do get a chance read the posts that I have on terminal value that I sent links to, in my post from Monday (March 4). In the last part of the company, w looked at building a DCF model, and how your choices of which cash flows to discount, the discount rate to use and the growth rates/patterns for a business have to be tailored to the firms.
Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/termvalue.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session11slides.pdf
Post class test:
https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session11Atest.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session11Asoln.pdf

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Session 8 (MBA): Determinants of Betas

Fri, 21 Aug 2026 03:07:00 -0000

We started class today by connecting the three pieces that we have talked about so far in class, the risk free rate, the equity risk premium and beta to an expected return and how that expected return becomes a cost of equity. We spent the rest of the class talking about the determinants of betas. Before we do that, though, there is one point worth emphasizing. Betas measure only non-diversifiable or market risk and not total risk (explaining why Harmony can have a negative beta and Philip Morris a very low beta).

1. Betas are determined in large part by the nature of your business. Products and services with elastic demand should have higher betas than products with inelastic demand. And if you do get a chance, try to make that walk down Fifth Avenue...
2. Your cost structure matters. The more fixed costs you have as a firm, the more sensitive your operating income becomes to changes in your revenues.
3. Financial leverage: When you borrow money, you create a fixed cost (interest expenses) that makes your equity earnings more volatile. Thus, the equity beta in a safe business can be outlandishly high if has lots of debt.
I also introduced the notion of betas being weighted averages with the Disney - Cap Cities example.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session8.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session8test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session8soln.pdf

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Session 13 (Val Undergrad): Loose Ends in Valuation

Thu, 20 Aug 2026 21:07:00 -0000

In this class started with a look at customizing discounted cash flows models to reflect the companies that we are valuing, talking about equity versus firm valuation and choice of growth patterns We then moved on to a discussion of cash holdings and why investors may discount that cash in the hands of some companies, to cross holdings, and why they are difficult to incorporate into value, and to other assets that you may consider adding on, because we have not considering them yet. On the latter, the key component to remember is not to double count an asset, by first counting its cash flow and then the value of the asset itself.

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/looseends.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session13slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session13Ctest.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session13Csoln.pdf

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Session 9 (Undergraduate): Determinants of Betas

Thu, 20 Aug 2026 15:07:00 -0000

Betas measure only non-diversifiable or market risk and not total risk (explaining why Harmony can have a negative beta and Philip Morris a very low beta).
1. Betas are determined in large part by the nature of your business. Products and services with elastic demand should have higher betas than products with inelastic demand. And if you do get a chance, try to make that walk down Fifth Avenue...
2. Your cost structure matters. The more fixed costs you have as a firm, the more sensitive your operating income becomes to changes in your revenues.
3. Financial leverage: When you borrow money, you create a fixed cost (interest expenses) that makes your equity earnings more volatile. Thus, the equity beta in a safe business can be outlandishly high if has lots of debt.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session9.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session9atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session9asoln.pdf

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Session 12: Show me the money: First steps in Return Measurement

Thu, 20 Aug 2026 09:07:00 -0000

In this session, we started on measuring investment returns, drawing on the theme from Jerry Macguire (Show me the money). After making an argument for the primacy of cash flows, we looked at how a good measure of return is time weighted and incremental and how every investment is a project (small or large). We spent the bulk of the class describing the Rio Disney investment, and then computing the return on capital on that investment, based upon expected revenues and operating income. We also looked at what the hurdle rate for the investment should be, drawing on the notion that the discount rate for a project should reflect the risk of that project (business, geography etc.). We also extended the return on capital concept to entire companies to judge the quality of existing investments. In the last part of the class, we talked about the process of getting from earnings to cash flows, by adding back depreciation and amortization, subtracting capital expenditures and change in working capital. Depreciation leaves an imprint because it saves taxes, capital expenditure drain cash flows and investments in inventory tie up cash.
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session12slides.pdf
Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session12test.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session12soln.pdf

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Session 7 (MBA): The Greeks are here.. Regression Betas

Thu, 20 Aug 2026 03:07:00 -0000

Today's class covered the conventional approach to estimating betas, which is to run a regression of returns on a stock against returns on the market index. We first covered the estimation choices: how far back in time to go (depends on how much your company has changed), what return interval to use (weekly or monthly are better than daily), what to include in returns (dividends and price appreciation) and the market index to use (broader and wider is better). We also looked at the three key pieces of output from the regression:
1. The intercept: This is a measure of how good or bad an investment your stock was during the period of your regression. To compute the measure correctly, you net out Rf(1-Beta) from the Intercept:
Jensen's alpha = Intercept - Riskfree rate (1- Beta)
If this number is a positive (negative) number, your stock did better (worse) than expected, after adjusting for risk and market performance.
2. The slope: is the beta, albeit with standard error
3. The R squared: measures the proportion of the risk in your stock that is market risk, with the balance being firm specific/diversifiable risk.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session7.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session7test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session7soln.pdf

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Session 12 (Val MBAs): Loose Ends in Valuation

Wed, 19 Aug 2026 21:07:00 -0000

During today's session we finished started on the loose ends in valuation, with cash and cross holdings first, and then moving on to other assets. The simple rule to follow is to make sure that you neither double count nor entirely miss assets owned by a firm. We then moved on to look how complexity plays out in valuation, before ending with questions of what to include in debt, with different rules on debt in your cost of capital calculation and debt that you net out from firm value to get to equity value. Finally, if you are interested, I have a post on dysfunctional DCFs that you may enjoy reading: http://aswathdamodaran.blogspot.com/2015/02/dcf-myth-1-if-you-have-ddiscount-rate.html

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/looseends.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session12slides.pdf
Post class test:
https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session12atest.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session12asoln.pdf

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Icarus or Lazarus? The GoPro and LinkedIn Question

Wed, 19 Aug 2026 15:07:00 -0000

In this session, I look at two companies that were high flyers until recently that have hit road blocks and ask the question: Has the price fallen enough for them to be good investments?
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/GPRO&LNKD.pdf
Blog Post: http://aswathdamodaran.blogspot.com/2016/02/lazarus-rising-or-icarus-falling-gopro.html
Valuation of GoPro: http://www.stern.nyu.edu/~adamodar/pc/blog/GoProFeb2016.xls
Valuation of LinkedIn:
http://www.stern.nyu.edu/~adamodar/pc/blog/LinkedinFeb2016.xls

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Session 8 (Undergraduate): Reading a Beta Regression

Wed, 19 Aug 2026 03:07:00 -0000

Today's class covered the conventional approach to estimating betas, which is to run a regression of returns on a stock against returns on the market index. We first covered the estimation choices: how far back in time to go (depends on how much your company has changed), what return interval to use (weekly or monthly are better than daily), what to include in returns (dividends and price appreciation) and the market index to use (broader and wider is better). We also looked at the three key pieces of output from the regression:
1. The intercept: This is a measure of how good or bad an investment your stock was during the period of your regression. To compute the measure correctly, you net out Rf(1-Beta) from the Intercept:
Jensen's alpha = Intercept - Riskfree rate (1- Beta)
If this number is a positive (negative) number, your stock did better (worse) than expected, after adjusting for risk and market performance.
2. The slope: is the beta, albeit with standard error
3. The R squared: measures the proportion of the risk in your stock that is market risk, with the balance being firm specific/diversifiable risk.
Finally, we used the beta to come up with an expected return for stock investors/cost of equity for the company.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session8.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session8atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session8asoln.pdf

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Session 13: From Earnings to Time-weighted Incremental Cashflow Returns

Tue, 18 Aug 2026 21:07:00 -0000

In today's class, we started the move from cash flows to incremental cash flows by asking two questions: (1) What will happen if you take the project and (2) What will happen if you do not? If the answer is the same to both questions, the item is not incremental. That is why "sunk" costs, i.e., money already spent, should not affect investment decision making. It is also the reason that we add back the portion of allocated G&A that is fixed and thus has nothing to do with this project. Finally, we looked at two time-weighted, incremental cash flow approaches to calculating returns, NPV and IRR, and used them to analyze the Rio Disney theme part. In the second half of the class, I talked about why currency choices should not affect investment decisions (but sometimes do) as well as ways of dealing with uncertainty, ranging from payback to simulations. I also talked about Edward Tufte’s book on the visual display of information, and you can find it at this link:
https://www.amazon.com/Visual-Display-Quantitative-Information/dp/0961392142/ref=sr_1_1?hvadid=241656058541&hvdev=c&hvlocphy=9067609&hvnetw=g&hvqmt=e&hvrand=11533164312248058396&hvtargid=kwd-909679892&hydadcr=3235_10393094&keywords=the+visual+display+of+quantitative&qid=1679504391&sr=8-1
If, like me, you find yourself fascinated by simulations, but your statistics is a little rusty, you can try this paper I have on statistical distributions.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3237778
You don’t have to read the whole paper, just the appendix.

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session13slides.pdf
Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session13test.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session13soln.pdf

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Session 6 (MBA): Risk free Rates and Equity Risk Premiums

Tue, 18 Aug 2026 15:07:00 -0000

We started today’s class by tying up the last loose ends with risk free rates: how to estimate the risk free rate in a currency where there is no default free entity issuing bonds in that currency and why risk free rates vary across currencies. The rest of today's class was spent talking about equity risk premiums. The key theme to take away is that equity risk premiums don't come from models or history but from our guts. When we (as investors) feel scared or hopeful about everything that is going on around us, the equity risk premium is the receptacle for those fears and hopes. Thus, a good measure of equity risk premium should be dynamic and forward looking. We looked at three different ways of estimating the equity risk premium.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session6.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session6test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session6soln.pdf

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Session 13 (Val MBAs): Stock-based Compensation and Story Telling in Valution!

Tue, 18 Aug 2026 09:07:00 -0000

In this class, we started by looking at stock-based compensation, and why it is an expense that should be treated as one, notwithstanding arguments about it being non-cash. We then started on story telling in valuation, and the process, using Uber in June 2014 as an example, and talking about the steps involved.
No start of the class test
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session13slides.pdf
Post class test:
https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session13aXtest.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session13aXsoln.pdf

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Management Matters: Facebook and Twitter

Tue, 18 Aug 2026 03:07:00 -0000

In this session, I look at two social media icons, albeit going in different directions as businesses.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/Facebook&Twitter.pdf
Blog post: http://bit.ly/1SFspIU
Valuations:
Facebook: http://www.stern.nyu.edu/~adamodar/pc/blog/FacebookFeb2016.xls
Twitter: http://www.stern.nyu.edu/~adamodar/pc/blog/TwitterFeb2016.xls

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Session 15 (Val Undergrad): More on Stories and Numbers

Mon, 17 Aug 2026 21:07:00 -0000

In this class, we continued our discussion of stories, and how critical it is to keep the feedback loop open, so that you can make your stories better. I also talked about runaway stories and the big market delusion, and if you are interested, here are my posts on the topics:
Runaway stories: https://aswathdamodaran.blogspot.com/2015/11/runaway-stories-and-fairy-tale-endings.html
Big Market Delusions: https://aswathdamodaran.blogspot.com/2019/12/the-market-is-huge-revisiting-big.html
We also talked about how story breaks, shifts and changes. Since I talked about dealing with new earnings reports, I thought you may find these two posts of interest in how narratives shift, and with them, values:
Reacting to Earnings Reports: http://aswathdamodaran.blogspot.com/2014/08/reacting-to-earnings-reports-lets-get.html
Narrative Resets: http://aswathdamodaran.blogspot.com/2015/08/narrative-resets-revisiting-tech-trio.html

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/storytest.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session15slides.pdf
No post class test and solution

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In Practice 3a: Estimating ERP for a company

Mon, 17 Aug 2026 15:07:00 -0000

In this session, I look at how to create customized ERP for individual companies.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/ERPforCompany.pdf
Excel spreadsheet for customized ERP for this spreadsheet: http://www.stern.nyu.edu/~adamodar/pc/datasets/ERP&GDP.xls
Updated country risk premium spreadsheet: http://www.stern.nyu.edu/~adamodar/pc/datasets/ctryprem.xls

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The Little Book of Valuation - A Lead in!

Mon, 17 Aug 2026 09:07:00 -0000

This is the introductory session, with twelve more sessions (one for each chapter) for the updated version of the Little Book of Valuation, published in March 2024.
Publisher: John Wiley
Amazon link: https://www.amazon.com/Little-Book-Valuation-Company-Profits/dp/1394244401
In this session, I provide a (very) short review of what is new in the book and why I did the update.

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Session 7 (Undergraduate): Equity Risk Premiums (Implied) and Company

Mon, 17 Aug 2026 03:07:00 -0000

After briefly reviewing the weaknesses of historical premiums, we computed an implied equity risk premium for the S&P 500, using the level of the index. We then moved on to country risk premiums, using the country default spreads that we estimated for countries as a starting point and then coming up with country risk premiums for individual countries. We closed by looking at how best to estimate company equity risk premiums.

Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session7.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session7atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session7asoln.pdf

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Chapter 1: Value - More than a number!

Sun, 16 Aug 2026 21:07:00 -0000

Description: Support session to accompany chapter 1 of the updated version of the Little Book of Valuation, published in March 2024.
Publisher: John Wiley
Amazon link: https://www.amazon.com/Little-Book-Valuation-Company-Profits/dp/1394244401
My webpage for the book: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/littlebook2ed.htm

In this session, I lay the philosophical foundations of valuation, drawing a contrast between value and price, and talking about how bias, uncertainty and complexity remain the biggest enemies of good valuation.

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Session 5 (MBA): Risk and Return - First Steps

Sun, 16 Aug 2026 15:07:00 -0000

In this session, we start on understanding and measuring risk, as a precursor to coming up with hurdle rates. Here are some themes.
1. The Essence of Risk: Risk is neither good nor bad. It is just a fact of life. As the Chinese symbols indicate, it is a combination of danger and opportunity.
2. More on Models: The oldest and still-default model for measuring risk is the CAPM but it does require lots of assumptions before you get to beta being your measure of risk.
3. Diversifiable versus non-diversifiable risk: The best way to understand diversifiable and non-diversifiable risk is to take your company and consider all of the risks that it is exposed to and then categorize these risks into whether they are likely to affect just your company, your company and a few competitors, the entire sector or the overall market.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session5.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session5atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session5asoln.pdf

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Chapter 2: Tools of the Trade!

Sun, 16 Aug 2026 09:07:00 -0000

Description: Support session to accompany chapter 2 of the updated version of the Little Book of Valuation, published in March 2024.
Publisher: John Wiley
Amazon link: https://www.amazon.com/Little-Book-Valuation-Company-Profits/dp/1394244401
My webpage for the book: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/littlebook2ed.htm

In this session, I look at the three tools that we draw on the most in valuation - time value of money, allowing us to move cash flows across time, financial statement analysis, where we make sense of the raw data we get from accounting and statistics, allowing us to make sense of large and contradictory data.

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The Disruptive Duo: Amazon and Netflix!

Sun, 16 Aug 2026 03:07:00 -0000

The word disruption is vastly overused in today's discourse, but if there are two companies that epitomize disruption, it is Amazon and Netflix. In this session, I look at the most recent earnings reports of the two companies, contrasting investing and trading reactions to them. I close by arguing that if you want to get a measure of your faith in value and investing, no two stocks would have tested that faith more in the last few years than these two.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/Amazon&Netflix.pdf
Blog Post: http://bit.ly/1QlCHaB
Amazon: http://www.stern.nyu.edu/~adamodar/pc/blog/AmazonFeb2016.xls
Netflix: http://www.stern.nyu.edu/~adamodar/pc/blog/NetflixFeb2016.xls

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Chapter 3: Every asset has an intrinsic value!

Sat, 15 Aug 2026 21:07:00 -0000

Description: Support session to accompany chapter 3 of the updated version of the Little Book of Valuation, published in March 2024.
Publisher: John Wiley
Amazon link: https://www.amazon.com/Little-Book-Valuation-Company-Profits/dp/1394244401
My webpage for the book: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/littlebook2ed.htm

In this session, I look at the steps in intrinsic valuation, starting with cash flows, moving on to costs discount rates (costs of equity and capital) and topping off with growth and forecasts for the future. I use Kraft Heinz in 2022 as my lab experiment to illustrate the process.
KHC valuation: https://pages.stern.nyu.edu/~adamodar/pc/littlebook2/KHCValuation2023.xlsx

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The Race to the top: Apple versus Alphabet

Sat, 15 Aug 2026 15:07:00 -0000

In this webcast, I look at Apple and Alphabet's earnings reports in early 2016, with the intent of differentiating between the pricing reaction to these reports and the value reaction. As a postscript, I give my biased, completely subjective judgment on which of the two companies is the better business, the better investment and the better trade (and it is not the same one for each).
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/ApplevsAlphabet.pdf
Blog post: http://bit.ly/1KkI7qn
Valuations:
Apple: http://www.stern.nyu.edu/~adamodar/pc/blog/AppleFeb2016.xls
Alphabet: http://www.stern.nyu.edu/~adamodar/pc/blog/GoogleFeb2016.xls

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Chapter 4: It's all relative!

Sat, 15 Aug 2026 09:07:00 -0000

Description: Support session to accompany chapter 4 of the updated version of the Little Book of Valuation, published in March 2024.
Publisher: John Wiley
Amazon link: https://www.amazon.com/Little-Book-Valuation-Company-Profits/dp/1394244401
My webpage for the book: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/littlebook2ed.htm

In this session, I look at the steps in pricing, starting with standardizing market price (all multiples such as PE and EV to EBITDA are standardized prices), putting together peer groups and controlling for differences.

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Session 6 (Undergraduate): Risk free Rates and Risk Premiums (Part 1)

Sat, 15 Aug 2026 03:07:00 -0000

We started on the question of risk free rates and how to assess them in different currencies. In particular, we noted that government bonds are not always risk free and may have to be cleansed of default risk. The rest of today's class was spent talking about equity risk premiums. The key theme to take away is that equity risk premiums don't come from models or history but from our guts. When we (as investors) feel scared or hopeful about everything that is going on around us, the equity risk premium is the receptacle for those fears and hopes. Thus, a good measure of equity risk premium should be dynamic and forward looking. We looked at two different ways of estimating the equity risk premium.
1. Survey Premiums: I had mentioned survey premiums in class and two in particular - one by Merrill of institutional investors and one of CFOs. You can find the Merrill survey on its research link (but you may be asked for a password). You can get the other surveys at the links below:
CFO survey: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2422008
Analyst survey: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2450452
2. Historical Premiums: We also talked about historical risk premiums. To see the raw data on historical premiums on my site (and save yourself the price you would pay for Ibbotson's data...) go to updated data on my website:
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/data.html
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session6.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session6atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session6asoln.pdf

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Chapter 5: Stories and Numbers!

Fri, 14 Aug 2026 21:07:00 -0000

Description: Support session to accompany chapter 5 of the updated version of the Little Book of Valuation, published in March 2024.
Publisher: John Wiley
Amazon link: https://www.amazon.com/Little-Book-Valuation-Company-Profits/dp/1394244401
My webpage for the book: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/littlebook2ed.htm

In this session, I look at how every valuation tells a story, and how a good valuation is a bridge between stories and numbers. I develop a five-step process for connecting stories to numbers and . use the IPO of Zomato, the Indian online food delivery company, to illustrate the process.
Zomato IPO valuation: https://pages.stern.nyu.edu/~adamodar/pc/littlebook2/ZomatoIPO.xlsx

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Session 4 (MBA): Closing the books on the objective function

Fri, 14 Aug 2026 15:07:00 -0000

In this session, we looked at alternatives to stock price maximization as an objective and noted that the alternatives all come with their own trade offs. In particular, top-down based management systems tend to have trouble with systematic problems (across many firms) and picking an intermediate objective (like increasing market share) can lead you to lose focus. I concluded with a pitch for market-based systems, because they come with built-in correction mechanisms.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session4.pdf
Add on Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session4addon.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session4test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session4soln.pdf

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Chapter 6: Promise aplenty - Young Growth Companies

Fri, 14 Aug 2026 09:07:00 -0000

Description: Support session to accompany chapter 6 of the updated version of the Little Book of Valuation, published in March 2024.
Publisher: John Wiley
Amazon link: https://www.amazon.com/Little-Book-Valuation-Company-Profits/dp/1394244401
My webpage for the book: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/littlebook2ed.htm

In this session, I examine the challenges with valuing young growth companies, starting with the absence of historical data and a working business model, and moving on to the challenges created by high failure risk and use of stock-based compensation. I use Airbnb's IPO in 2020 to examine ways of getting around these challenges.
Airbnb IPO valuation: https://pages.stern.nyu.edu/~adamodar/pc/littlebook2/AirbnbIPO.xlsx

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Session 5 (Undergraduate): Risk and Return Models

Fri, 14 Aug 2026 03:07:00 -0000

In this session, we completed our discussion of the "right" objective function for businesses. We then began our discussion of risk by defining risk and listing the ingredients of a good risk and return model. We closed with an intuitive derivation of the capital asset pricing model and alternative models.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session5.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session5atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session5asoln.pdf

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Chapter 7: Growing pains - Mature growth firms!

Thu, 13 Aug 2026 21:07:00 -0000

Description: Support session to accompany chapter 7 of the updated version of the Little Book of Valuation, published in March 2024.
Publisher: John Wiley
Amazon link: https://www.amazon.com/Little-Book-Valuation-Company-Profits/dp/1394244401
My webpage for the book: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/littlebook2ed.htm

In this session, I look at the issues you run into when valuing more mature growth companies, i.e., companies that have succeeded in growing and scaling up, and the questions that arise as they continue to try to deliver growth. In the process of looking at valuing Alphabet in 2023, I also look at accounting inconsistencies that have be set right in valuing and pricing these companies.
Alphabet valuation: https://pages.stern.nyu.edu/~adamodar/pc/littlebook2/Google2023.xlsx

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Session 3 (MBA): Managers, Markets and Mayhem

Thu, 13 Aug 2026 15:07:00 -0000

Today's class extended the discussion of everything that can wrong in the real world. Lenders, left unprotected, will be exploited. Information can be noisy and markets can be irrational. Social costs can be large. Relating back to class, I have a couple of items on the agenda and neither requires extensive reading or research. I would like you to think about market efficiency without any preconceptions. You may believe that markets are short term, volatile and over react, but I would like you to consider the basis of these beliefs. Is it because you have anecdotal evidence or because you have been told it is so or is it based upon something more concrete? i also want to think about how managers in publicly traded companies can position themselves best to consider the public good, without being charitable with other people's money. We have spent a couple of sessions being negative - managers are craven, markets are noisy and bondholders get ripped off. In the next class, we will take a more prescriptive look at what we should be doing in this very imperfect world.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session3.pdf
Add on Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/TheranosBoard.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session3test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session3soln.pdf

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Chapter 8: Valuation Viagra: Mature firm valuation

Thu, 13 Aug 2026 09:07:00 -0000

Description: Support session to accompany chapter 8 of the updated version of the Little Book of Valuation, published in March 2024.
Publisher: John Wiley
Amazon link: https://www.amazon.com/Little-Book-Valuation-Company-Profits/dp/1394244401
My webpage for the book: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/littlebook2ed.htm

In this session, I examine why mature companies, which with their long histories, solid profits and established practices, should be easy to value, and the reason why the possibility that they could be managed differently (and perhaps better) can thrown a wrench in the works. I use Unilever, a company with a host of well-known brands, that has had trouble delivering growth, to illustrate the challenges.
Unilever valuation: https://pages.stern.nyu.edu/~adamodar/pc/littlebook2/Unilever2023.xlsx

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The Violent Earnings Season: Price and Value Perspectives

Thu, 13 Aug 2026 03:07:00 -0000

Every three months, as companies go through the ritual of reporting earnings and the market goes through its own ritual of comparing actual to expected numbers and repricing stocks, it is easy to lose perspective. In this session, I draw a distinction between the value game and the pricing game, and how investors (who play the value game) and traders (who play the pricing game) look at earnings reports differently.
Blog Post: http://bit.ly/1LbJaU9
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/earningspricevsvalue.pdf

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Chapter 9: Doomsday - Declining and Distressed firms

Wed, 12 Aug 2026 21:07:00 -0000

Description: Support session to accompany chapter 9 of the updated version of the Little Book of Valuation, published in March 2024.
Publisher: John Wiley
Amazon link: https://www.amazon.com/Little-Book-Valuation-Company-Profits/dp/1394244401
My webpage for the book: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/littlebook2ed.htm

In this session, I examine at why investors have trouble valuing and pricing declining and distressed companies, arguing that the combination of shrinking revenues, margins under assault and the possibility of bankruptcy make for a potent mix. I try to value Bed, Bath and Beyond, a brick and mortar US retail company to illustrate the hurdles and ways to get around them.
BB&B valuation: https://pages.stern.nyu.edu/~adamodar/pc/littlebook2/BB&B2022.xlsx

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Session 4 (Undergraduate): Conflicts of Interest and Corporate Objectives

Wed, 12 Aug 2026 15:07:00 -0000

This class extended the discussion of everything that can wrong in the real world. Lenders, left unprotected, will be exploited. Information can be noisy and markets can be irrational. Social costs can be large. Relating back to class, I have a couple of items on the agenda and neither requires extensive reading or research. I would like you to think about market efficiency without any preconceptions. You may believe that markets are short term, volatile and over react, but I would like you to consider the basis of these beliefs. Is it because you have anecdotal evidence or because you have been told it is so or is it based upon something more concrete? i also want to think about how managers in publicly traded companies can position themselves best to consider the public good, without being charitable with other people's money. We have spent a couple of sessions being negative - managers are craven, markets are noisy and bondholders get ripped off. We closed by looking at what we should be doing in this very imperfect world in terms of choices.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session4.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session4atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session4asoln.pdf

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Chapter 10: Bank on it - Financial Service firm valuation

Wed, 12 Aug 2026 09:07:00 -0000

Description: Support session to accompany chapter 10 of the updated version of the Little Book of Valuation, published in March 2024.
Publisher: John Wiley
Amazon link: https://www.amazon.com/Little-Book-Valuation-Company-Profits/dp/1394244401
My webpage for the book: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/littlebook2ed.htm

In this session, I look at financial service companies and why they need different treatment from their non-financial counterparts. Starting with the recognition that debt is more raw material than a source of capital to financial service firms, I also look at why estimating cash flows has always been a challenge, leading many to stay with the dividend discount model. Using Citigroup in 2023, shortly after the SVB fiasco, as an example, I contrast a dividend discount model value for the bank with a model where I estimate free cash flows to equity.
Citigroup valuation: https://pages.stern.nyu.edu/~adamodar/pc/littlebook2/CitiVal2023.xlsx

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Session 2 (MBA): The Objective in Corporate Finance

Wed, 12 Aug 2026 03:07:00 -0000

In today's class, we started on what the objective in running a business should be. While corporate finance states it to be maximizing firm value, it is often practiced as maximizing stock price. To make the world safe for stock price maximization, we do have to make key assumptions: that managers act in the best interests of stockholders, that lenders are fully protected, that information flows to rational investors and that there are no social costs. We started on why one of these assumptions, that stockholders have power over managers, fails and we will continue ripping the Utopian world apart next class.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr16/Session2.pdf
Add on Slides: http://www.stern.nyu.edu/~adamodar/cfspr16/Session2addon.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session2test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session2soln.pdf

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Chapter 11: Roller Coaster Investing - Cyclical and Commodity firms

Tue, 11 Aug 2026 21:07:00 -0000

Description: Support session to accompany chapter 11 of the updated version of the Little Book of Valuation, published in March 2024.
Publisher: John Wiley
Amazon link: https://www.amazon.com/Little-Book-Valuation-Company-Profits/dp/1394244401
My webpage for the book: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/littlebook2ed.htm

In this session, I look at commodity and cyclical companies, and how the volatility in operating metrics created by macro variables and commodity prices can cause valuations to fluctuate, and how best to counter this volatility. I use Toyota from 2009 and Royal Dutch from 2023 to illustrate this process.
Toyota valuation (from 2009): https://pages.stern.nyu.edu/~adamodar/pc/littlebook2/Toyota2009.xls
Shell valuation (from 2023)
https://pages.stern.nyu.edu/~adamodar/pc/littlebook2/ShellValuation23.xlsx

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Session 3 (Undergraduate): Corporate Governance

Tue, 11 Aug 2026 15:07:00 -0000

In this class, we started to look at the what can wrong with the Utopian world that allows us to focus on stock price maximization. In particular, we examined how the mechanisms that shareholders use to keep managers in line, the annual meeting and the board of directors, are flawed. We closed with the general question of looking at how much power stockholders have to create change in corporations.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session3.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session3atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session3asoln.pdf

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Chapter 12: Rules for the Road

Tue, 11 Aug 2026 09:07:00 -0000

Description: Support session to accompany chapter 12 of the updated version of the Little Book of Valuation, published in March 2024.
Publisher: John Wiley
Amazon link: https://www.amazon.com/Little-Book-Valuation-Company-Profits/dp/1394244401
My webpage for the book: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/littlebook2ed.htm

In this session, I look back at earlier chapters, trying to gather lessons for the road, ranging from not abandoning first principles to working on your weak side (stories, if you are a number cruncher, and numbers, if you are a story teller).

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Session 1 (MBA): The Foundations of Corporate Finance

Tue, 11 Aug 2026 03:07:00 -0000

In this session, I laid out the structure for the class and an agenda of what I hope to accomplish during the next 15 weeks. In addition to describing the logistical details, I presented my view that corporate finance is the ultimate big picture class because everything falls under its purview. The “big picture” of corporate finance covers the three basic decisions that every business has to make: how to allocate scarce funds across competing uses (the investment decision), how to raise funds to finance these investments (the financing decision) and how much cash to take out of the business (the dividend decision). The singular objective in corporate finance is to maximize the value of the business to its owners. This big picture was then used to emphasize five themes,: that corporate finance is common sense, that it is focused, that the focus shifts over the life cycle and that you cannot break first principles with immunity.
Syllabus (with slides for class): http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/cfsyllspr16.pdf
Project: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/cfproj.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session1test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session1soln.pdf

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Session 14: Equity analysis, acquisitions as projects and NPV vs IRR

Mon, 10 Aug 2026 21:07:00 -0000

We started this session by looking at to how taking an equity perspective can alter how you measure returns and cash flows, and alter the hurdle rate you use, using an iron ore project for Vale as illustration. We also looked looked at an acquisition as a really big project, and argued that the same rules should apply to acquisitions as to regular projects. The cash flows should include any side benefits and costs and the cost of capital you use should reflect the risk of the project (target company), not the entity looking at the project (acquiring firm). We moved on to comparing NPV versus IRR as decision rules, and why they might yield different answers for mutually exclusive projects, of both same and different lives.
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session14slides.pdf
Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session14test.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session14soln.pdf

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Session 2 (Undergraduate): More themes in corporate finance and introducing its objective

Mon, 10 Aug 2026 15:07:00 -0000

In this class, we began by looking at two other themes that animate corporate finance: that it is universal and that no one can violate its first principles with immunity. We then started on what the objective in running a business should be. While corporate finance states it to be maximizing firm value, it is often practiced as maximizing stock price. To make the world safe for stock price maximization, we do have to make key assumptions: that managers act in the best interests of stockholders, that lenders are fully protected, that information flows to rational investors and that there are no social costs. Next week, we will rip these assumptions apart and look at what can go wrong.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session2.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session2atest.pdf
Post class test solution:http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session2asoln.pdf

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Session 14 (Val MBAs): Story Closure and First DCFs

Mon, 10 Aug 2026 09:07:00 -0000

We started class today by finishing up the discussion of connecting stories to numbers, and how critical it is to keep the feedback loop open. We also looked at how stories can change or break. In that context, you might find this post that I had on how earning reports change stories useful:
https://aswathdamodaran.blogspot.com/2014/08/reacting-to-earnings-reports-narrative.html
We then looked at valuing a simple company (Con Ed) with a simple model (stable growth DDM) and how a market crisis can change value (with 3M). We then moved on to with a, model to value an index (the S&P 500). If you are interested in an updated version, where you can change the numbers try this link:
https://pages.stern.nyu.edu/~adamodar/pc/blog/S&P500ValueJan2024.xlsx
We then looked at valuing young companies, with the focus on Amazon. If you are interested in how best to adapt valuation models to value companies on the dark side. Specifically, we examined how best to value young companies with limited information. If you are interested, try this paper on valuing young companies:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1418687
I also have a blog post that you may find relevant for today’s discussion on how dilution in future years is already incorporated into value:
http://aswathdamodaran.blogspot.com/2018/07/share-count-confusion-dilution-employee.html

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/dcfvaltests.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/eqspr24/session14slides.pdf
Post class test:
https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session14Ctest.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session14Csoln.pdf

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Session 1 (Undergraduate): Introduction to Class

Mon, 10 Aug 2026 03:07:00 -0000

In this class, I laid out the structure for the class and an agenda of what I hope to accomplish during the next 15 weeks. In addition to describing the logistical details, I presented my view that corporate finance is the ultimate big picture class because everything falls under its purview. The “big picture” of corporate finance covers the three basic decisions that every business has to make: how to allocate scarce funds across competing uses (the investment decision), how to raise funds to finance these investments (the financing decision) and how much cash to take out of the business (the dividend decision). The singular objective in corporate finance is to maximize the value of the business to its owners. This big picture was then used to emphasize three themes, with two more to come in the next class: that corporate finance is common sense, that it is focused and that the focus shifts over the life cycle.
Syllabus: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/cfUGsyllspr16.pdf
Webpage for class: http://www.stern.nyu.edu/~adamodar/New_Home_Page/corpfinUG.html
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session1test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session1soln.pdf

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Session 16 (Val Undergrad): DCF Valuations (finally)

Sun, 09 Aug 2026 21:07:00 -0000

We started class today by valuing a simple company (Con Ed) with a simple model (stable growth DDM) and how a market crisis can change value (with 3M). We then moved on to with a, model to value an index (the S&P 500). If you are interested in an updated version, where you can change the numbers try this link:
https://pages.stern.nyu.edu/~adamodar/pc/blog/S&P500ValueJan2024.xlsx
We also looked at valuing young companies, with the focus on Amazon. If you are interested in how best to adapt valuation models to value companies on the dark side. Specifically, we examined how best to value young companies with limited information. If you are interested, try this paper on valuing young companies:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1418687
I also have a blog post that you may find relevant for today’s discussion on how dilution in future years is already incorporated into value:
http://aswathdamodaran.blogspot.com/2018/07/share-count-confusion-dilution-employee.html

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/dcfvaltests.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session16slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session16Dtest.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session16Dsoln.pdf

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Data Update 2016

Sun, 09 Aug 2026 15:07:00 -0000

Each year, I update industry averages for corporate financial and valuation metrics across global companies and my estimates of risk premiums (for the US & other countries). My 2016 update is just done and can be found at http://www.stern.nyu.edu/~adamodar/New_Home_Page/data.html
I hope that you find it useful.

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Session 15: Costco Case Discussion and Beyond!

Sun, 09 Aug 2026 09:07:00 -0000

A large portion of today's class was spent on the Costco case. The case presentation and case analysis (Excel file links) are below:
Case: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfexams/CostcoClinic.pdf
Presentation: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfexams/CostcoPresentation.pdf
Excel file: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfexams/Costcosoln.xlsx
While we did spend time on the details of the case, here were some general lessons that I hope you take away:
1. When a project creates cash flows in different businesses with different risks, the discount rates used have to reflect those differential risks. I kept the cash flows separate for the Clinic and retail and used different costs of capital for each one.
2. When a project uses up a resource, you have to factor that cost in, but you have to do so by looking at what will happen if you do not take the project as well. In the context of capacity, the clinic project will lead to capacity being used up earlier (in year 4) rather than later (in year 11). It is the difference in the present values of these costs that should be considered, not just the cost of investing in year 4.
3. When you decide to alter a project from finite life to a longer life, you have to behave differently in how you manage the project from the very beginning. In short, lengthening a project life is a trade off, where you settle for lower cash flows over the project life, in return for a higher ending value. In Costco Clinic terms, this will show up as more capital maintenance expenditures with the longer life than with the finite life. After the case, we looked at side costs and side benefits from projects, and how it is critical that we go beyond the hand waving (it is strategic, or good things will happened) to trying to make our best estimates of these costs and benefits and bringing them into the analysis.
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session15slides.pdf
Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session15test.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session15soln.pdf

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Preview of class

Sun, 09 Aug 2026 03:07:00 -0000

Corporate finance covers almost every aspect of business and is thus a big picture class. In this session, I lay out the philosophy of the class.

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Session 15 (Val MBAs): DCF Valuations across the Life Cycle

Sat, 08 Aug 2026 21:07:00 -0000

In this session, we completed our the challenges in valuing young companies, and then took a look at mature companies in transition, and how you have to value the status quo company and the restructured one to make a judgment on investing in it. We then moved on and looked at declining companies, where your forecasts may have to show declining revenues and margins, and added a twist with distressed companies, where you have to follow up your DCF. In the last part of the class we examined the issues (country risk, cross holdings and currency gyrations) that are part of emerging market company valuations.
Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/dcfvaltests2.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/eqspr24/session15slides.pdf
Post class test:
https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session15Ctest.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session15Csoln.pdf

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Intergalactic Finance: Valuing the Star Wars Franchise

Sat, 08 Aug 2026 15:07:00 -0000

I value one of my favorite movie franchises of all time, Star Wars, building in my estimates for the three new Star Wars movies, the spin offs and all the add ons. My conclusion is that this highlights Disney's strengths and perhaps should illuminate their plans for growth.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/StarWars.pdf
Spreadsheet: http://www.stern.nyu.edu/~adamodar/pc/blog/StarWars2015.xls
Blog Post: http://aswathdamodaran.blogspot.com/2015/12/intergalactic-finance-valuing-star-wars.html

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Session 17 (Val Undergrad): More intrinsic valuations!

Sat, 08 Aug 2026 09:07:00 -0000

In tis quiz-shortened session, we completed our the challenges in valuing young companies, and then took a look at mature companies in transition, and how you have to value the status quo company and the restructured one to make a judgment on investing in it.
Quiz at start of class: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqexams/ValUGQuiz2aSpr24.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session17slides.pdf

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The Compressed Tech Life Cycle: The Investor Handbook

Sat, 08 Aug 2026 03:07:00 -0000

The rapid aging of tech companies has consequences for investors who use tools that were developed for a old economy market, dominated by non-tech companies. Value investors, dependent on PE and told to buy great companies and just hold them, will find tech companies too expensive (when they are young) and bargains (when they are old), even if they are correctly price. Growth investors, focused on historical growth and the notion that growth is good, will make the mistake in reverse, finding young tech companies to be cheap and old tech companies to be expensive.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/techinvestors.pdf
Blog post: http://bit.ly/1MrjCSc

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Session 16: Options in Projects and Project Post-mortems

Fri, 07 Aug 2026 21:07:00 -0000

In this quiz-shortened session, after the quiz, we looked at the final pieces on investment analysis, starting with side benefits from projects (from small pluses to synergy in acquisitions). We also looked at optionality in projects, i.e., times when you can legitimately override conventional investment metrics to take a project, because you may have the option to delay, expand or abandon the project. Finally, we examined why we do postmortems on past projects as a prelude to both holding people accountable as well as making decisions on whether to continue, divest or abandon projects.
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session16slides.pdf
Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session16test.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session16soln.pdf

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The Compressed Tech Life Cycle: The Management Handbook

Fri, 07 Aug 2026 15:07:00 -0000

In a follow up to the argument that I made about tech life cycles being shorter than non-tech life cycles, I look at the challenges of managing a tech company. In particular, I argue that founders/owners/managers have three choices: acceptance, reseed and regrow and change the business.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/techmanagement.pdf
Blog post: http://bit.ly/1IYyw7y

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Session 16 (Val MBAs): intrinsic Value - Heading to closure!

Fri, 07 Aug 2026 09:07:00 -0000

In this quiz-shortened session, after the second quiz, we continued with our discussion of intrinsic valuation, by first finishing our discussion of emerging market companies before turning to financial service firms . For decades, we have valued banks using the dividend discount model, simply because getting cash flows is so difficult, but that approach is built on trusting management at banks to behave sensibly (paying out what they can afford to in dividends) and regulators to do the same. For me, that trust was breached in 2008, and I present a way of estimating FCFE for a bank, using investment in regulatory capital as my stand in for reinvestment. Next session, we will wrap up the valuation section and start on pricing. If you are interested in reading more about valuing financial service companies, try this link:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1798578
The Deutsche Bank post is here:
http://aswathdamodaran.blogspot.com/2016/10/deutsche-bank-greek-tragedy-at-german.html

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session16slides.pdf
Post class test:
https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session16Ctest.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session16Csoln.pdf

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Session 18 (Val Undergrad): Valuing Declining, Financial Service and Emerging Market firms

Thu, 06 Aug 2026 21:07:00 -0000

In this session, we wrapped up our discussion of intrinsic valuation. First, we talked about valuing declining and emerging market companies, and the challenges we face with each, before turning our attention to financial service firms For decades, we have valued banks using the dividend discount model, simply because getting cash flows is so difficult, but that approach is built on trusting management at banks to behave sensibly (paying out what they can afford to in dividends) and regulators to do the same. For me, that trust was breached in 2008, and I present a way of estimating FCFE for a bank, using investment in regulatory capital as my stand in for reinvestment. Next session, we will wrap up the valuation section and start on pricing. If you are interested in reading more about valuing financial service companies, try this link:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1798578.

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/dcfvaltests3.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session18slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session18Ctest.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session18Csoln.pdf

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Session 17: The Debt/Equity Trade off

Thu, 06 Aug 2026 09:07:00 -0000

In this class, we started our discussion of the financing question by drawing the line between debt and equity: fixed versus residual claims, no control versus control, and then used a life cycle view of a company to talk about how much it should borrow. We then started on the discussion of debt versus equity by looking at the pluses of debt (tax benefits, added discipline) and its minuses (expected bankruptcy costs, agency cost and loss of financial flexibility). Even with the general discussion, we were able to look at why firms in some countries borrow more than others, why having more stable earnings can make a difference in how much you can borrow and why having intangible assets can affect your borrowing capacity.
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session17slides.pdf
Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session17test.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session17soln.pdf

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Aging in Dog Years? The Short and Glorious Life of a Tech Company

Thu, 06 Aug 2026 03:07:00 -0000

All companies go through a life cycle, from birth (start up) to death (liquidation), but that process happens in hyper speed for tech companies. The same conditions that allow them to grow so fast also cause their rapid demise.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/TechLifeCycle.pdf
Blog Post: http://aswathdamodaran.blogspot.com/2015/12/aging-in-dog-years-short-glorious-life.html

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Session 17 (Val MBAs): Pricing 101

Wed, 05 Aug 2026 21:07:00 -0000

We started this class by setting the stage of pricing companies, contrasting the pricing process with the value process. The rest of the class was our first foray into pricing, with why pricing is so much more common than intrinsic value and how multiples are just standardized prices. We also started on the first steps in deconstructing pricing, with the definitional tests.
Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relval1test.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session17slides.pdf
Post class test:
https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session17Btest.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session17Bsoln.pdf

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Session 19 (Val Undergrad): Valuation Closure and Pricing 101

Wed, 05 Aug 2026 09:07:00 -0000

We started this class by finishing the last few ends of intrinsic value, by looking at the challenges in valuing companies with intangible assets and cyclical/commodity companies. With the latter, we talked about how using simulations can give you a handle on uncertainty. We then set the stage of pricing companies, contrasting the pricing process with the value process. The rest of the class was our first foray into pricing, with why pricing is so much more common than intrinsic value and how multiples are just standardized prices. We also started on the first steps in deconstructing pricing, with the definitional and descriptional tests.
Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relval1test.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session19slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session19Btest.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session19Bsoln.pdf

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Yahoo: The End Game?

Wed, 05 Aug 2026 03:07:00 -0000

In the webcast, I look at Yahoo, ahead of a decision by the board on whether the company should sell its operating assets, leaving it as a holding company with two big holdings, one in Alibaba and one in Yahoo Japan.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/YahooEndGame.pdf
Blog Post: http://bit.ly/1lJrU27

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Session 18: Optimizing the Debt Mix

Tue, 04 Aug 2026 21:07:00 -0000

We started this class by completing the debt trade off, by bringing in agency costs and financial flexibility, and looking at a financing hierarchy, starting with retained earnings as the most preferred and convertible preferred as the least preferred financing for firms. We looked at the Miller Modigliani theorem through the prism of the debt tradeoff and followed up by using the financing hierarchy that companies seem to move down, when they think about raising fresh financing. I then moved on to looking at how the cost of capital can be used to optimize the right mix of debt and equity. In effect, you estimate the costs of debt and equity at different debt ratios, and try to find the mix of debt and equity that minimizes your cost of capital. If you want to try your hand at using the spreadsheet to optimize debt ratio, try the following:
http://www.stern.nyu.edu/~adamodar/pc/capstru.xlsx
We will continue with this discussion next week. looking at limits to the approach, and variants.
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session18slides.pdf
Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session18test.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session18soln.pdf

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Session 23: Distressed Equity as an option

Tue, 04 Aug 2026 15:07:00 -0000

We started today's class by looking at valuing the option to abandon, and how being able to get out of a commitment can add value to it. We then looked at financial flexibility as an option, and argued that it was worth more to capital-constrained companies with unpredictable and high-value-added investments. We continued with our examination of equity in trouble, debt-laden companies. Given that the equity in these companies takes on the characteristics of an option, we teased out implications for investing in risky projects, financing and conglomerate acquisitions.

Start of the class test: www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/realoptions2mod.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall15/valsession23.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session23test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session23soln.pdf

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Session 18 (Val MBAs): More on Pricing - Descriptional and Analytical Tests

Tue, 04 Aug 2026 09:07:00 -0000

In this session, we continued with our discussion of pricing, starting with the analytics that drive PEG, PBV, EV/EBITDA and revenue multiples. During the session, I played the role of a naive equity research analyst, using sloppy pricing to push buy recommendations on stocks in a number of sectors, based purely on the level of multiples (low PE, low PBV etc.) and asking for pushback. I The bottom line, though, is that most companies that look cheap deserve to be cheap. The key to pricing is finding a mismatch between the pricing and the fundamentals (low PE & high growth, low PBV and high ROE, low EV to Sales and high margins). It is the basis for much of equity research, and takes the form of screens. If you are interested, I have a post that expands on the notion of screening.
http://aswathdamodaran.blogspot.com/2012/06/passive-value-investing-screening-for.html

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relval2atest.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session18slides.pdf
Post class test:
https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session18Atest.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session18Asoln.pdf

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Session 22: The Options to Delay and Expand

Tue, 04 Aug 2026 03:07:00 -0000

In today's class, we completed our discussion of the option to delay by looking at natural resource options, i.e., undeveloped reserves owned by natural resource companies. We argued that these reserves will be under valued using conventional DCF approaches, which ignore the optionality embedded in them, and that the option premium would increase with the uncertainty about natural resource prices. We also looked at the options to expand into new markets or products and how it derives its value from exclusivity. I am attaching the post-class test and solution.

Start of the class test: www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/realoptions1.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall15/valsession22.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22soln.pdf

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Session 20 (Val Undergrad): Pricing - Descriptional and Analytical Tests

Mon, 03 Aug 2026 21:07:00 -0000

In this session, we continued with our discussion of pricing, starting with the analytics that drive PEG, PBV, EV/EBITDA and revenue multiples. During the session, I played the role of a naive equity research analyst, using sloppy pricing to push buy recommendations on stocks in a number of sectors, based purely on the level of multiples (low PE, low PBV etc.) and asking for pushback. I The bottom line, though, is that most companies that look cheap deserve to be cheap. The key to pricing is finding a mismatch between the pricing and the fundamentals (low PE & high growth, low PBB and high ROE, low EV to Sales and high margins). It is the basis for much of equity research, and takes the form of screens. If you are interested, I have a post that expands on the notion of screening.
http://aswathdamodaran.blogspot.com/2012/06/passive-value-investing-screening-for.html

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relval2atest.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session20slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session20AXtest.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session20AXsoln.pdf

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Session 21: Introduction to Real Options

Mon, 03 Aug 2026 15:07:00 -0000

This session covered the basics of options, starting with why real options are so attractive to analysts and investors: they allow you to add a premium to your DCF value. The two building blocks for real option value are learning (from what is going on around you or ongoing events) and adapting your behavior. There are three questions that underlie the use of real options. The first is recognizing when you are dealing with an option, with a payoff diagram being the give away. The second is looking for exclusivity which is what gives options value. The third is using an option pricing model, which is built on replication and arbitrage. We laid the foundations for all three questions today and will build on those.

Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall15/valsession21.pdf

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Session 19: Optimizing Financing Mix (Continued)

Mon, 03 Aug 2026 09:07:00 -0000

In this class, we started by tying up loose ends on the cost of capital approach, starting with why moving to the optimal changes the value of a business (hint: it is all in the tax code) and then looking at how sensitive the optimal debt ratio is to changes in operating income or rating constraints. We also looked at enhancements to the approach, where we incorporated indirect bankruptcy costs in the analysis. Finally, we examined the determinants of the optimal. In particular, it was differences in tax rates, cash flows (as a percent of value) and risk that determined why some companies have high optimal debt ratios and why some have low or no debt capacity. Next session, we will wind up the analysis of the optimal debt ratio and then move on to whether to move to that optimal, and if yes, how quickly. In the meantime, you can catch up on the project by taking your company and putting the numbers into the spreadsheet at the link below:
https://www.stern.nyu.edu/~adamodar/pc/capstru.xlsx
Remember to check the iteration box in Excel calculation preferences to make sure that it is checked.

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session19slides.pdf
Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session19test.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session19soln.pdf

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Session 20: Private Company, IPO and VC valuation

Mon, 03 Aug 2026 03:07:00 -0000

In this session, we put the finishing touches on private company valuation by looking at key questions that arise in private company valuation (illiquidity, key person etc.) and then looked at valuing IPOs. In particular, the question of what happens to the proceeds from an offering can affect value per share, and the offering price itself is subject to the dynamics of the issuance process, with investment bankers more likely to under price than over price offerings.
Start of the class test: www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/pvtcotest.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall15/valsession20.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session20test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session20soln.pdf

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Session 19 (Val MBAs): More on Pricing - Applications

Sun, 02 Aug 2026 21:07:00 -0000

In today's class, we closed the book on relative valuation by looking at how to find the right peer group for you company and how to control for differences, with both stories and statistics. It is amazing how widespread relative valuation is. I found this link recently on rules of thumb in valuation. Take a look at it.... especially the multiples mentionedmultiples, and how to pick the "right" multiple for a valuation, with the answers ranging from cynically picking one that best fits your agenda to picking one that reflects what managers in that business care about. It is amazing how widespread relative valuation is. I found this link recently on rules of thumb in valuation. Take a look at it.... especially the multiples mentioned
http://www.bizstats.com/reports/valuation-rule-thumb.php
If you are interested in seeing the market regressions, across multiples and different regional groupings, you can find them here:
https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/MReg24.html

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relval3atest.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session19slides.pdf
Post class test:
https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session19Btest.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session19Bsoln.pdf

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Botox, Viagra or Placebo?: The Pfizer Allergan Deal

Sun, 02 Aug 2026 15:07:00 -0000

Pfizer is planning to buy Allergan in a mega-deal, motivated by two factors: the desire to buy growth (which it sorely lacks) and move out of US tax jurisdiction. In this webcast, I look at both but spend most of my time assessing the value effect of the tax code
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/PfizerDeal.pdf
Spreadsheet: http://www.stern.nyu.edu/~adamodar/pc/blog/PfizerInversion2015.xls
Blog Post: http://aswathdamodaran.blogspot.com/2015/11/value-and-taxes-breaking-down-pfizer.html

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Session 21 (Val Undergrad): Pricing - Peer Groups and Controlling for Differences

Sun, 02 Aug 2026 09:07:00 -0000

In today's class, we closed the book on pricing by looking at how to find the right peer group for you company and how to control for differences, with both stories and statistics. It is amazing how widespread relative valuation is. I found this link recently on rules of thumb in valuation. Take a look at it.... especially the multiples mentionedmultiples, and how to pick the "right" multiple for a valuation, with the answers ranging from cynically picking one that best fits your agenda to picking one that reflects what managers in that business care about. It is amazing how widespread relative valuation is. I found this link recently on rules of thumb in valuation. Take a look at it.... especially the multiples mentioned
http://www.bizstats.com/reports/valuation-rule-thumb.php
If you are interested in seeing the market regressions, across multiples and different regional groupings, you can find them here:
https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/MReg24.html

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relval3atest.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session21slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session21Ctest.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session21Csoln.pdf

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Session 19: Closing the Relative Valuation Book and Asset-based Valuation

Sun, 02 Aug 2026 03:07:00 -0000

In this session, we closed the book on relative valuation by looking at how to pick the "right" multiple for a valuation, with the answers ranging from cynically picking one that best fits your agenda to picking one that reflects what managers in that business care about. We then moved on to asset based valuation: liquidation valuation, accounting valuation and sum of the parts valuation, and closed the class by starting on the process of valuing private businesses.
Start of the class test: www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relval3atest.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall15/valsession19.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session19Atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session19Asoln.pdf

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Session 20: Optimizing Debt Mix - APV and Peer Group Pressure

Sat, 01 Aug 2026 21:07:00 -0000

We started this class with the adjusted present value approach, where we begin with the unlevered firm value, and then add the tax benefits of debt and net out expected bankruptcy costs. While you can download the APV spreadsheet that I have online, I don’t really see a need to do the APV analysis of your company’s capital structure, since the expected bankruptcy cost is a black box. We then looked at peer group analysis, where companies decide how much to borrow by looking at what other companies in the sector do. You can check out the debt ratios for other companies in your sector by going to my website:
US industry averages: http://www.stern.nyu.edu/~adamodar/pc/datasets/dbtfund.xls
Global industry averages: http://www.stern.nyu.edu/~adamodar/pc/datasets/dbtfundGlobal.xls

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session20slides.pdf
Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session20test.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session20soln.pdf

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Runaway Stories and Fairy Tale Endings: The Cautionary Tale of Theranos

Sat, 01 Aug 2026 15:07:00 -0000

In this session, I look at the climb of Theranos, a start up founded by a 19-year old dropout from Stanford and how a story can sometimes be so good that no one wants to ask tough questions.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/TheranosStory.pdf
Blog Post: http://aswathdamodaran.blogspot.com/2015/11/runaway-stories-and-fairy-tale-endings.html

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Session 20 (Val MBAs): Asset Based Valuation and First Steps on Private Business Valuation

Sat, 01 Aug 2026 09:07:00 -0000

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Checkmate or Stalemate: Valeant's fall from investing grace

Sat, 01 Aug 2026 03:07:00 -0000

In this session, I look at Valeant's rise from obscure Canadian drug company to a value investing darling, and its precipitous fall in the last three weeks.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/ValeantFall.pdf
Valuation: http://www.stern.nyu.edu/~adamodar/pc/blog/ValeantNov2015.xls
Blog Post: http://aswathdamodaran.blogspot.com/2015/11/checkmate-or-stalemate-valeants-fall.html

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Session 22 (Val Undergrad): Asset-based and Private company valuation

Fri, 31 Jul 2026 21:07:00 -0000

In this session, we looked at asset based valuation: liquidation valuation, accounting valuation and sum of the parts valuation. Specifically, we focused on when it makes sense to value a company by valuing its assets and what pitfalls to avoid. If you are interested in a more extensive assessment of companies like United Technologies, you may find this reading useful:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1609795
We then started our discussion of the valuation of private companies by noting how the lack of a market price for a business can affect your valuation in implicit and explicit ways, and then arguing that the value you attach to a private business can depend on why/for whom you are doing the valuation.

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/assetvaluation.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session22slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22Btest.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22Bsoln.pdf

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Divergence: The Changing Drug Business

Fri, 31 Jul 2026 15:07:00 -0000

In this session, I look at how the prescription drug business is changing, particularly in the US, and the implications for R&D and investing at these companies.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/DrugBusiness.pdf
Blog post: http://aswathdamodaran.blogspot.com/2015/11/divergence-in-drug-businesses.html

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Session 21: Debt Design

Fri, 31 Jul 2026 09:07:00 -0000

In this class, we looked at the design principles for debt. We started by completing a five step process for designing the perfect debt before looking at both intuitive and quantitative ways of debt design. In particular, we looked at a macro economic regression of firm value/operating income against interest rates, GDP, inflation and exchange rates. Keeping in mind the objective of matching debt to assets, think about the typical investments that your firm makes and try to design the right debt for the project. If your firm has multiple businesses, design the right kind of debt for each business. In making these judgments, you should try to think about
- whether you would use short term or long term debt
- what currency your debt should be in
- whether the debt should be fixed or floating rate debt
- whether you should use straight or convertible debt
- what special features you would add to your debt to insulate the company from default
Your objective is to get the tax advantages without exposing yourself to default risk. If you want to carry this forward and do a quantitative analysis of your debt, you can try regressing enterprise value and operating income at your firm against macroeconomic variable. The spreadsheet below helps you do that:
http://www.stern.nyu.edu/~adamodar/pc/macrodur.xlsx
It has annual and quarterly data through 2023. Just a warning that it is extremely noisy and may spit out output that does not make sense. It also contains the sector averages, broken down by SIC code. The post class test & solution for today is attached.

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session21slides.pdf
Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session21test.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session21soln.pdf

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Session 18: Comparables and Controlling for Pricing Differences

Fri, 31 Jul 2026 03:07:00 -0000

In this session, we continue with our discussion of pricing companies based upon how similar companies are priced. In the process, we looked at how to identify comparable companies and controlling for differences across companies.

Start of the class test: www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relval2atest.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall15/valsession18.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session18test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session18soln.pdf

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Session 21 (Val MBAs): Valuing Private Companies and IPOs

Thu, 30 Jul 2026 21:07:00 -0000

In this session, we started by looking at the challenges of valuing private-to-private transactions, where the buyer of a private business is undiversified and cares deeply about illiquidity, and how the values are depressed as a consequence. We then drew a contrast to the same company being valued by a public company, and argued that this should lead to private businesses increasingly become parts of public companies or going public themselves. In the final section of the class, we looked at valuing/pricing IPOs, and how to deal with offer proceeds from the IPO and the IPO process itself. In the next session, after the quiz, we will start our discussion of real options, requiring you to download and bring packet 3 with you.

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/pvtcotest.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session21slides.pdf
Post class test:
https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session21Ftest.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session21Fsoln.pdf

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Session 17: Pricing - Distribution and Determinants

Thu, 30 Jul 2026 15:07:00 -0000

In today's class, we extended our analysis of multiples by first looking at PE and PEG ratios, then moving on to PBV ratios and finally examining enterprise value multiples: EV/Invested Capital, EV/EBITDA and EV/Sales. In particular, we noted that the drivers for EV multiples are analogs of the equity multiples: growth in operating income replacing growth in net income, reinvestment rates replacing payout ratios, ROC replacing ROE and cost of capital replacing cost of equity. There is a simple way to find the companion variable (the key driver) for a multiple. With an equity multiple, you can get this variable by dividing the net income by the denominator of the multiple. With an enterprise value, you divide after-tax operating income by the denominator of the multiple. With the EV/Sales ratio, this yields the after-tax operating margin as the determining variable. We used that measure to evaluate the value of a brand name, by comparing the pricing of Coca Cola with its current operating margin with its value with a generic margin.
Start of the class test: www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relval1test.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall15/valsession17.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session17Atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session17Asoln.pdf

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Session 23 (Val Undergrad): Private Company and IPO Valuation

Thu, 30 Jul 2026 09:07:00 -0000

In this session, we started by looking at the challenges of valuing private-to-private transactions, where the buyer of a private business is undiversified and cares deeply about illiquidity, and how the values are depressed as a consequence. We then drew a contrast to the same company being valued by a public company, and argued that this should lead to private businesses increasingly become parts of public companies or going public themselves. In the final section of the class, we looked at valuing/pricing IPOs, and how to deal with offer proceeds from the IPO and the IPO process itself. In the next session, after the quiz, we will start our discussion of real options, requiring you to download and bring packet 3 with you.

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/pvtcotest.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session23slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session23Ftest.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session23Fsoln.pdf

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Session 16: Introduction to Relative Valuation (Pricing)

Thu, 30 Jul 2026 03:07:00 -0000

In this session, which followed the quiz, we looked at the elements of pricing, why it is so popular among analysts and investors and ways to deconstruct multiples.
Quiz (if you want to try it): http://www.stern.nyu.edu/~adamodar/pdfiles/eqexams/EqQuiz2aFall15.pdf
And Solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqexams/EqQuiz2asolFall15.xls
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall15/valsession16.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session16Atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session16Asoln.pdf

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Session 22: Dividends - First Steps (Quiz shortened)

Wed, 29 Jul 2026 21:07:00 -0000

We started this class with the third and final quiz of the class, before moving on to the dividend principle. We started with an assessment of what dividends would look like if they were truly residual cash flows before looking how they have evolved in practice - they are sticky, they follow earnings and the shift towards buybacks in recent decades, and how that shift can be explained by the increased desire for flexibility among companies that face more uncertainty about future earnings. We then moved on to two measures of dividend policy - dividend payout and yield, before looking at three schools of thought on dividends that cover the spectrum (dividends don’t matter, dividends are bad, dividends are good)., We ended the class by looking at two bad reasons for paying dividends (that they are more certain, that you had a good year). In the next class, we will talk about three good reasons for paying dividends as well as a way of measuring how much cash can be returned (FCFE). Of course, quiz 3 is also scheduled for Wednesday, and I wish you the best on that front.

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session22slides.pdf
Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session22test.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session22soln.pdf

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Session15: The Last Pieces of Intrinsic Value and First Steps on Pricing

Wed, 29 Jul 2026 15:07:00 -0000

In this session, we complete our discussion of intrinsic valuation by looking at the valuation of financial service, commodity and intangible-asset companies. We also open the pricing discussion by looking at why value and price can be different and what to do when they are.
Start of the class test: www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/dcfandprice.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall15/valsession15.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session15Atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session15Asoln.pdf

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Session 22 (Val MBAs): Introduction to options

Wed, 29 Jul 2026 09:07:00 -0000

After we got the third quiz done, we moved on to looking at real options in corporate finance and valuation. We started by looking at the basic option pricing models, and the ingredients that make for real option applications - that there be an option at play (with an underling asset and contingent cash flows), that the option have significant economic value (and the importance of exclusivity) and that the conditions for option pricing model hold (that the asset and the option be tradedÃ¢â‚¬Â¦). While we did not get much of a chance to apply these tests, we will use them next session to look at different real option applications.

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session22slides.pdf
Post class test:
https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22Ftest.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22Fsoln.pdf

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Session 14: More valuations on the dark side

Wed, 29 Jul 2026 03:07:00 -0000

In this session, we completed the discussion of young, growth companies, with a discussion of why valuation when uncertainty is greatest has the biggest pay off. We then moved on to mature companies in transition and looked at the depressing job of valuing declining and distressed companies. We ended with a discussion of emerging market companies.
Start of the class test: www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/dcfvaltests3.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall15/valsession14.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session14Atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session14Asoln.pdf

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Session 24 (Val Undergrad): Introduction to Real Options

Tue, 28 Jul 2026 21:07:00 -0000

After we got the third quiz done, we moved on to looking at real options in corporate finance and valuation. We started by looking at the basic option pricing models, and the ingredients that make for real option applications - that there be an option at play (with an underling asset and contingent cash flows), that the option have significant economic value (and the importance of exclusivity) and that the conditions for option pricing model hold (that the asset and the option be traded…). While we did not get much of a chance to apply these tests, we will use them next session to look at different real option applications.

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session24slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session24Ftest.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session24Fsoln.pdf

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Session 13: First Valuations

Tue, 28 Jul 2026 15:07:00 -0000

In today's class, we started with a quick review of narrative changes, shifts and breaks and how earnings reports, in particular, can alter your narrative for a company. Since many of you will be dealing with earnings reports in the next couple of weeks, I thought you may find these two posts of interest in how narratives shift, and with them, values:
Reacting to Earnings Reports: http://aswathdamodaran.blogspot.com/2014/08/reacting-to-earnings-reports-lets-get.html
Narrative Resets: http://aswathdamodaran.blogspot.com/2015/08/narrative-resets-revisiting-tech-trio.html
we started with two conventional valuations, one of 3M and the other of the S&P 500. We then talked about the valuaton of young, growth companies by emphasizing that you will be wrong 100% of the time and that it was okay, because the market is usually even more wrong. Next session, we will continue with the discussion by looking at mature companies.
Start of the class test: www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/dcfvaltests2.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall15/valsession13.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session13Atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session13Asoln.pdf

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Session 23: Good and Bad Reasons for paying dividends

Tue, 28 Jul 2026 09:07:00 -0000

In this session, we started by looking at some bad reasons for paying dividends and a couple of good ones, including having an investor base that likes dividends, one iffy reason (dividends as a signal) and one borderline reason (that you can rip of lenders). We then looked at three questions that need to be asked in assessing dividend policy, starting with how much a company can afford to return to stockholders (FCFE), then looking at how much is actually returned in dividends and buybacks and finally assessing whether you trust management enough to give them the freedom to set dividend policy.
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session23slides.pdf
Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session23test.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session23soln.pdf

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Session 12: More Loose Ends and Narrative and Numbers

Tue, 28 Jul 2026 03:07:00 -0000

In this session, I complete the discussion of loose ends by looking at complexity, non-interest bearing debt and equity options. I then look at how to get from stories to numbers.
Start of the class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/dcfvaltestsMod.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall15/valsession12.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session12test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session12soln.pdf

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Session 23 (Val MBAs): Real Option Applications

Mon, 27 Jul 2026 21:07:00 -0000

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Big Deal but is it a good deal? The ABInBev Acquisition of SABMiller

Mon, 27 Jul 2026 15:07:00 -0000

In this session, I look at the motives for the ABInBev acquisition of SABMiller and whether there are ways to justify the $29 billion paid as a premium.
Blog Post: http://bit.ly/1OWav0X
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/InbevSAB.pdf
Valuation of SABMiller: http://www.stern.nyu.edu/~adamodar/pc/blog/SABControl.xls
Valuation of synergy: http://www.stern.nyu.edu/~adamodar/pc/blog/InbevSABrestrusynergy.xls

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Session 25 (Val Undergrad): Real Option Applications - Patents and Natural Resource Reserves

Mon, 27 Jul 2026 09:07:00 -0000

In this session, we moved on with an examination of option pricing models, and used real options to examine why the rights to non-viable technology can be valuable and why the values of natural resource companies are affected by both the level and variability of commodity prices . As a cautionary note, you are pushing option pricing models to breaking point when using them to value these options, but the key takeaway is that even if you do not value the options explicitly, understanding that they exist can alter how you behave as a business. It is also true that the information that you will need to value many real options will be accessible only if you work at the pharmaceutical or natural resource company, and consequently, you cannot apply it to your company (project), since you will not have that access. During the course of the class, there were a couple of places where I was guilty of not being as clear as I should have been. One was when we discussed why I used guarantor’s pre-tax cost of debt in my present value calculation for Biogen’s license fee. Let me break down my rationale into multiple parts:
I use guarantor’s cost of debt, since the guarantor is the one that has contractually agreed to pay the license fee and the risk is that they will not (if they default).
I use the pre-tax cost of debt, since there is no tax advantage that Biogen gets from the guarantor using debt. Using an after-tax cost of debt would have inflated the value of the license fee for a tax benefit that Biogen would not be getting.
I also looked at undeveloped reserves as options, and why using discounted cash flow valuations may under value commodity companies, as well as the value of the option to abandon investments and projects.

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session25slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session25Ftest.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session25Fsoln.pdf

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The Future of the Ride Sharing Business: Playing Pundit!

Mon, 27 Jul 2026 03:07:00 -0000

In this final webcast (of a three part series), I look at how I see the ride sharing business evolving, looking at scenarios ranging from winner-take-all to a game changer.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/RideSharing.pdf
Blog Post:
1. YouTube on Uber: https://youtu.be/HU6jOtcZh3U?list=PLUkh9m2Borqk3IDRAWNFvMqVqlJDVtcd-
2. YouTube on Lyft: https://youtu.be/Jnworr-qpN8?list=PLUkh9m2Borqk3IDRAWNFvMqVqlJDVtcd-

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A Price Premium for the Prancing Horse: The Ferrari IPO

Sun, 26 Jul 2026 15:07:00 -0000

The Ferrari IPO is coming up soon and it is a case study on how a valuable brand name can affect value and pricing.
Blog Post: http://aswathdamodaran.blogspot.com/2015/10/the-ferrari-ipo-price-premium-for.html
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/FerrariIPO.pdf
Status Quo Valuation: http://www.stern.nyu.edu/~adamodar/pc/blog/FerrariIPO2015.xls
Revved up Valuation:
http://www.stern.nyu.edu/~adamodar/pc/blog/FerrariIPORevitup2015.xls

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Session 24 (Val MBAs): Distressed Equity as an Option + Acquirers' Anonymous

Sun, 26 Jul 2026 09:07:00 -0000

We started this session by looking at the value of flexibility through the option pricing lens and concluding that the value of flexibility is greatest at capital constrained firms, with uncertain and lucrative investment opportunities. We then turned to looking at distressed equity as an option, focusing on money-losing companies with a lot of debt, and used that template to talk about why equity in deeply troubled firms can continue to trade in the face of financial adversity, how equity investors can shift risk at highly levered firms and why equity in conglomerates can become less valuable, even if you buy companies are fair value. I am sorry if you found the rest of today's session to be a downer. Don't get me wrong. Acquisitions are exciting and fun to be part of but they are not great value creators and in today's sessions, I tried to look at some of the reasons. While the mechanical reasons, using the wrong discount rate or valuing synergy & control right, are relatively easy to fix, the underlying problems of hubris, ego and over confidence are much more difficult to navigate. There are ways to succeed, though, and that is to go where the odds are best: small targets, preferably privately held or subsidiaries of public companies, with cost cutting as your primary synergy benefit. If you get a chance, take a look at a big M&A deal and see if you can break it down into its components.
Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session24slides.pdf
Post class test:
https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session24test.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session24soln.pdf

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Session 11: Choose a DCF Model and Loose Ends in Valuation

Sun, 26 Jul 2026 03:07:00 -0000

In today’s class we started with a discussion of which model to use in valuing a company and then moved on to the loose ends in valuation, items we often pay little heed to or attach arbitrary premiums/discounts for. We began by looking at cash and whether it should command a premium at some companies (if they have a good track record and have restrictions on raising capital) and a discount at others (if investors don't trust you with the cash). We then looked at cross holdings in other companies and the numerous barriers to valuing them. Third, we looked at other assets and argued that you should never double count assets.
Start of the class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/looseendsnew.ppt
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall15/valsession11.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session11test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session11soln.pdf

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Session 26 (Val Undergrad): Distressed Equity as an Option and Acquirers' Anonymous

Sat, 25 Jul 2026 21:07:00 -0000

We started this session by looking at the value of flexibility through the option pricing lens and concluding that the value of flexibility is greatest at capital constrained firms, with uncertain and lucrative investment opportunities. We then turned to looking at distressed equity as an option, focusing on money-losing companies with a lot of debt, and used that template to talk about why equity in deeply troubled firms can continue to trade in the face of financial adversity, how equity investors can shift risk at highly levered firms and why equity in conglomerates can become less valuable, even if you buy companies are fair value. I am sorry if you found the rest of today's session to be a downer. Don't get me wrong. Acquisitions are exciting and fun to be part of but they are not great value creators and in today's sessions, I tried to look at some of the reasons. While the mechanical reasons, using the wrong discount rate or valuing synergy & control right, are relatively easy to fix, the underlying problems of hubris, ego and over confidence are much more difficult to navigate.

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session26slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session26Atest.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session26Asoln.pdf

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Lyft on or Lyft off? The Other Ride Sharing Companies

Sat, 25 Jul 2026 15:07:00 -0000

This is the second of a three-part series. In the first, I looked at Uber, the dominant ride sharing company and a magnet for publicity. In this one, I value Lyft, a company that has a adopted a very different strategy than Uber, narrow in its market focus, rather than broad, and understated in its ambitions. I also expand the analysis to examine how ride sharing companies are being priced (rather than valued) by investors. I close with my thoughts on whether, as an investor, I would invest in Lyft or Uber.
Blog post: http://bit.ly/1MPFxaM
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/LyftSept2015.pdf
The series
1. Uber: https://youtu.be/HU6jOtcZh3U?list=PLUkh9m2Borqk3IDRAWNFvMqVqlJDVtcd-
2. Lyft and the Pricing of Ride Sharing Companies: This one
3. Ride Sharing Business:

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Session 25: Valuation - The Last Frontier!

Sat, 25 Jul 2026 09:07:00 -0000

In thissession, we continued on the question of how best to value a company by first looking at the four key components of value - cash flows from existing investments, growth in the future, discount rates and the terminal value. With cash flows, we noted the contrast between cash flows to equity and cash flows to the firm, with the former being after debt payments and the latter before. With discount rates, we argued that the same discount rates that we computed for investment hurdle rates can be used in valuation, with the caveat that these discount rates will change over time, as a company changes. While you can adjust betas, costs of debt and debt ratios, a simpler way to target a cost of capital in stable growth is to look at the median cost of capital for companies. These numbers are from January 2024 . With growth, the key is recognition that growth comes from what companies do in terms on how much they reinvest and how well, rather than from outside sources. Finally, for terminal value, I argued that the growth rate in perpetuity has to be less than or equal to the risk free rate. Since you will be valuing companies in different stages in the life cycle, I would like you to use the spreadsheet linked below:
http://www.stern.nyu.edu/~adamodar/pc/fcffsimpleginzu.xlsx
As you can see, the valuation is built around revenue growth, operating margins and sales to capital ratios, all variables we spent time talking about in class.

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr24/session25slides.pdf
Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session25test.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/session25soln.pdf

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The Corporate Life Cycle: Investing, Finance and Management Lessons

Sat, 25 Jul 2026 03:07:00 -0000

Like human beings, companies are born (start up), go through growth, mature and decline, albeit with higher mortality rates at the early stages. In this session, I look at how the focus in corporate finance shifts as businesses age and the management skills that are required at each stage. I also look at the evolution of uncertainty and its effect on pricing and valuation across the life cycle.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/corporatelifecycle.pdf

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Session 27 (Val Undergrad): Acquisitions Completed and Value Enhancement

Fri, 24 Jul 2026 21:07:00 -0000

In this class, we continued to make a case against acquisition practices, with transaction multiples, accretion and defensive deals all under fire, before looking at the narrow pathways to generating value from acquisitions (go small, buy private, focus on cost synergies). We then started our discussion of value enhancement, by drawing a contrast between price and value enhancement. With value enhancement, we broke down value change into its component parts: changing cash flows from existing assets, changing growth rates by either reinvesting more or better, lengthening your growth period by creating or augmenting competitive advantages and lowering your cost of capital. In the next and last session for this class, we will use this framework to compute an expected value of control as a the product of the probability of changing the way a company is run and the value increase from that change (optimal - status quo value).

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr24/session27slides.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session26Atest.pdf
Post-class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session26Asoln.pdf

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Session 10: Fundamental Growth and Terminal Value

Fri, 24 Jul 2026 15:07:00 -0000

In this session, we complete the discussion of growth and then move on to the mysteries of terminal value, the biggest number in most valuations and the one most likely to get you into trouble.
Start of the class test: http://www.stern.nyu.edu/~adamodar/pc/blog/FerrariIPO2015.xls
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall15/valsession10.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session10test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session10soln.pdf

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Session 25 (Val MBAs): Acquisitions (Completed) and Value Enhancements!

Fri, 24 Jul 2026 09:07:00 -0000

In this class, we continued to make a case against acquisition practices, with transaction multiples, accretion and defensive deals all under fire, before looking at the narrow pathways to generating value from acquisitions (go small, buy private, focus on cost synergies). We then started our discussion of value enhancement, by drawing a contrast between price and value enhancement. With value enhancement, we broke down value change into its component parts: changing cash flows from existing assets, changing growth rates by either reinvesting more or better, lengthening your growth period by creating or augmenting competitive advantages and lowering your cost of capital. In the next and last session for this class, we will use this framework to compute an expected value of control as a the product of the probability of changing the way a company is run and the value increase from that change (optimal - status quo value).

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session25slides.pdf
Post class test:
https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session25test.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session25soln.pdf

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Session 26: The Fat Lady is Singing!

Thu, 23 Jul 2026 21:07:00 -0000

In this session, I used the results you got from the corporate financial analyses of your companies to review the class, starting with corporate governance, wending my way through hurdle rates and topping off with capital structure and dividend policy.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/ProjSumm24New.pdf
Corporate Finance Project numbers: https://pages.stern.nyu.edu/~adamodar/pc/cfanalysis/cfspr24.xlsx

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Session 9: Analyst Estimates of Growth and Fundamental Growth

Thu, 23 Jul 2026 15:07:00 -0000

In this session, we continued (after the quiz) on the discussion of growth, first talking about analyst growth and then moving on to fundamentals.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall15/valsession9.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session9test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session9soln.pdf

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Session 26 (Val MBAs): The Grand Finale!

Thu, 23 Jul 2026 09:07:00 -0000

In this final session for the class, I use your valuation/pricing of companies as a vehicle to review the class, from intrinsic valuation to pricing to real options.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/valclosespr24.pdf
Project valuations: http://www.stern.nyu.edu/~adamodar/pc/eqrec/spr2024.xlsx

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Session 8: From Earnings to Cash Flows

Thu, 23 Jul 2026 03:07:00 -0000

In this session, we make the journey from earnings to cash flows, starting with taxes, moving on to capital expenditures and then to working capital. We also look at estimating cash flow to equity. Finally, we begin the discussion of growth, by looking at historical growth.
Start of the class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/growthrateMod.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall15/valsession8.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session8test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session8soln.pdf

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Session 28 (Val Undergrad): Closing the sale!

Wed, 22 Jul 2026 21:07:00 -0000

In this final session for the class, I use your valuation/pricing of companies as a vehicle to review the class, from intrinsic valuation to pricing to real options.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/valUGclosespr24.pdf
Project valuations: http://www.stern.nyu.edu/~adamodar/pc/eqrec/sprUG2024.xlsx

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Session 7: Estimating Earnings

Wed, 22 Jul 2026 15:07:00 -0000

In this session, we start on the discussion of cash flows, by looking at issues that come up in measuring earnings: updating the number, correcting for accounting inconsistencies and normalizing.
Start of the class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/cftests.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall15/valsession7.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session7test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session7soln.pdf

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The Corporate Life Cycle: Implications for Managing and Investing

Wed, 22 Jul 2026 09:07:00 -0000

For much of the last decade, I have been incorporating the idea that companies age, just like human beings do, and with just as much reluctance, into my corporate finance, valuation and investment philosophies classes. In short, it has become my one unifying construct that I can use to explain or at least talk about almost every phenomenon in business. Drawing on those lessons, and my many blog posts on the corporate life cycle, I have written a book on the topic, soon to be published by Penguin Random House. The book starts with a description of the life cycle, and the determinants of its length and shape, and then has four separate sections (each with 3-5 chapters) on implications for corporate finance, valuation, investing and management. I hope you enjoy the book as much as I enjoyed writing it.
Publication date: Late August, 2024
Links to book (for pre-order):
1. Amazon: https://www.amazon.com/Corporate-Lifecycle-Investment-Management-Implications/dp/0593545060
2. Barnes & Noble: https://www.barnesandnoble.com/w/the-corporate-life-cycle-aswath-damodaran/1143170651?ean=9780593545065
3. Bookshop.org: https://bookshop.org/p/books/the-corporate-lifecycle-business-investment-and-management-implications-aswath-damodaran/19850366?ean=9780593545065
4. Apple: https://books.apple.com/us/audiobook/the-corporate-life-cycle-business-investment/id1680865376
There will be an Indian edition that should come out at about the same time, which will be available on Indian online sites as well.

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The Price of Scandal: Sturm und Drang at Volkswagen

Wed, 22 Jul 2026 03:07:00 -0000

In the last month (August 31, 2015 to September 30, 2015), Volkswagen has lost almost 40% of its market capitalization, almost entirely as a result of revelations that it had cheated on emissions tests with the EPA. I examine whether the market reaction is over done, under done or just right.
(Sorry about the sound shift at about the 7th minute. Had to switch microphones)

Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/VWScandal.pdf
Pre scandal valuation: http://www.stern.nyu.edu/~adamodar/pc/blog/VW2015pre.xls
Post scandal valuation: http://www.stern.nyu.edu/~adamodar/pc/blog/VW2015post.xls
Blog post: http://bit.ly/1RixK4V

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Country Risk: The 2024 Update

Tue, 21 Jul 2026 21:07:00 -0000

If there is a lesson that I learned from the 2008 market crisis, it is that market crises almost always play out as big changes in the price of risk. In keeping with that lesson, I have been updating my implied equity risk premiums for the S&P 500 every month, and my country risk premiums twice a year. I have also created two annual updates, one on equity risk premiums that I publish in March of each year and the other on country risk that I publish in July each year. This session provides an abridged version of the my 2024 country risk premium update, starting with the drivers of country risk, moving on to measures (sovereign ratings, country risk scores, equity risk premiums) and closing with an explanation of how country risk plays out in business and investing decisions.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/CountryRisk2024.pdf
Paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4896539
Blog Post:
Data:
1. Equity Risk Premiums, by country, in July 2024: https://pages.stern.nyu.edu/~adamodar/pc/datasets/ctrypremJuly24.xlsx
2. Currency riskfree rates in July 2024: https://pages.stern.nyu.edu/~adamodar/pc/blog/CurrencyRiskfreeJuly2024.xlsx

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The Corporate Life Cycle: The Key Ideas

Tue, 21 Jul 2026 09:07:00 -0000

In this general introduction to the corporate life cycle, I explain what the corporate life cycle is, in terms of phases, and why it matters, by looking at how the focus for a business changes through the life cycle (corporate finance), how valuing and pricing it shifts as companies age (in valuation) and its tie to different investment philosophies. While the session provides the core ideas on the corporate life cycle, you can dig deeper (if you are interested and have the time) by either taking the class (with twenty sessions) that follows on this playlist, or by reading the book.
Class webpage: https://pages.stern.nyu.edu/~adamodar//New_Home_Page/webcastCLC.htm
Book webpage: https://pages.stern.nyu.edu/~adamodar//New_Home_Page/CLC.htm
Publisher's book link: https://www.penguinrandomhouse.com/books/723161/the-corporate-life-cycle-by-aswath-damodaran/

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Session 5: ERP and Relative Risk Measures

Tue, 21 Jul 2026 03:07:00 -0000

In this session, we complete the discussion of equity risk premiums and start on measures of relative risk, arguing that while beta may be the measure that most people think off, it is but one of many.
Start of the class test: http://www.stern.nyu.edu/~adamodar/pc/implprem/ERPOct15.xls
In this session, I look at the process of estimating equity risk premiums, starting with the standard practice of looking at historical premiums, then moving on to measuring country risk premiums and closing with a look at implied equity risk premiums.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall15/valsession5.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session5test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session5soln.pdf

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Chapter/Session 1: The Search for a Unifying Theory

Mon, 20 Jul 2026 21:07:00 -0000

In this session, I look at the appeal of the a unifying theory, something that explains everything in a discipline, and where that search has taken us in finance, befor introducing the corporate life cycle as a qualifying entrant, because it explains so much of what is observable in corporate, investment and management behavior.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch1.pdf
Exercise:
a. Pick five companies that span the life cycle spectrum, from young growth to declining. This may take a little experimentation, and you may have to revisit your choices as you move through the sessions. If you want, pick a company based upon corporate age:
1. A (young) company that has gone public in the last five years
2. A high growth (in revenues) company, with a small market cap
3. A growth company, with a large market cap
4. An older company that is still healthy and growing
5. An older company struggling to grow
b. Look at each of these companies and assess where they were in the life cycle ten years ago.

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No happy ending? My Vale Journey

Mon, 20 Jul 2026 15:07:00 -0000

I valued Vale in November 2014 and bought the stock because it was under valued. When the stock dropped 25% in April 2015, I revalued it again and found a value reason to hold on. It is now September and the stock has dropped another 20%. Revaluing it now, I have to sell, though I so, so want to hold on.
Blog post: http://bit.ly/1JuCnT6
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/ValeTheEnd.pdf
Vale Valuation in September 2015: http://www.stern.nyu.edu/~adamodar/pc/blog/ValeSept2015.xls

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Chapter/Session 2: The Corporate Life Cycle - Basics

Mon, 20 Jul 2026 09:07:00 -0000

In this session, I look at the six phases of the corporate life cycle (at least my version) from start up to corporate decline/demise. I look at the characteristics of companies in each phase, and the operating, financing and ownership changes that occur.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch2.pdf
Exercise:
a.     For each of the five companies on your list, estimate the operating metrics (revenue growth, operating margins) in the most recent years.
b.     For each of the five companies on your list, evaluate whether there has been, and if yes, how much capital raised (from debt or equity) in the most recent years.
c.     For each of the five companies on your list, look at the shareholder ownership breakdown (founder, insiders, individuals, institutions) in the most recent year.

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Chapter/Session 3: The Corporate Life Cycle - Measures and Determinants

Sun, 19 Jul 2026 21:07:00 -0000

In this session, I address a key question - how do you determine where a company (your own or one that you are interested in) falls in the life cycle, starting corporate age but moving on to operating metrics. I also look at the determinants of the length (how long a company survives), the height (how big it gets) and slope (how quickly it scales up) as a prelude to drawing a contrast between successful 21st century and 20th century companies.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch3.pdf
Exercise:
a. For each of the five companies on your list, estimate the corporate age (from founding year to today).
b. For each of the five companies on your list, examine the revenue growth rates and operating margins of the industry groups they belong to.

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Chapter/Session 4: Corporate Life Cycle - Transitions

Sun, 19 Jul 2026 09:07:00 -0000

Session Description: Moving from one phase of the life cycle to the next one can be a rite of passage, filled with hope and challenges. In this session, I look at the transitions as start-ups seek out venture capital, as young companies go public, as public companies try to raise additional capital and as middle-aged companies try to shrink and divest as they face decline.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch4.pdf
Exercise:
a.     If any of your companies are private, find out whether it has accessed venture capital and if so, on what terms.
b.     If any of your five companies are public, examine when the company went public and what its operating metrics (revenue growth, operating margins) looked like at the time of its IPO.
c.     Have any of your companies, since going public, have raised more capital from external providers? If yes, did they raise additional equity or borrow more money?
d.     Have any of your firms been targeted by private equity investors or activists? If yes, when and why?

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The Uber Narrative Rollercoaster: A Wild Ride!

Sun, 19 Jul 2026 03:07:00 -0000

Uber has been a fascinating case study of how narrative drives numbers. This is my September 2015 update to a valuation that I did in June 2014, and I go through how my narrative and numbers have changed.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/UberSept2015.pdf
Valuation: http://www.stern.nyu.edu/~adamodar/pc/blog/uberSept15.xls

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Chapter/Session 5: Corporate Finance 101

Sat, 18 Jul 2026 21:07:00 -0000

Session Description: Corporate finance, as a body of knowledge, looks at the first financial principles involved in running a business, with decisions broken down into three groupings - investment (where you decide what assets/projects to invest in), financing (where you find the right mix of debt & equity, as well as the right type of debt and dividends (where you determine how much (if any) cash to return to your owners. In this session, I do a quick overview of these first principles, with a preliminary assessment of how they evolve with the corporate life cycle.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch5.pdf
Exercise:
a. Given your assessments of the five companies, which corporate finance decision (investment, financing, dividend) would you expect to have primacy?
b. Are there any corporate finance mismatches (companies not behaving the way they should, given their life cycle position) in your firms?

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The Naming Game

Sat, 18 Jul 2026 15:07:00 -0000

Can your name affect the course of your life? As a business, can a name affect your value and price? Not quite cosmic questions, but I examine them in this webcast designed to supplement by blog post:
Blog post: http://aswathdamodaran.blogspot.com/2015/09/what-in-name-of-umlauts-alphabets-and.html
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/namingame.pdf

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Chapter/Session 6: Business Investing across the Life Cycle

Sat, 18 Jul 2026 09:07:00 -0000

Session Description: It is inarguable that deciding whether to invest and where to invest is central to building a successful business. I look at the the investment decision in terms of both coming up with an accetable hurdle rate as well as measuring returns on an investment project, and examine why the way that businesses assess hurdle rates and assess investment quality change over a company's life cycle.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch6.pdf
Exercise:
a.     Estimate the costs of equity, debt and capital for each of the companies in your group. Discuss the differences.
b.     Estimate the accounting returns (to equity and invested capital) for each of the companies in your group. How would you read the excess returns that you get from comparing accounting returns to costs of equity/capital?
c.     What does a typical project (if any) look like for your company? What challenges would you face in assessing whether it is a good or bad investment?
d.     Is there optionality in investments in any of your companies? How would you make that judgment?

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Session 2: The Bermuda Triangle of Valuation and the big picture

Sat, 18 Jul 2026 03:07:00 -0000

Today's class started with a test on whether you can detect the direction bias will take, based on who or why a valuation is done. The solutions are posted online. We then moved on to talk about the three basic approaches to valuation: discounted cash flow valuation, where you estimate the intrinsic value of an asset, relative valuation, where you value an asset based on the pricing of similar assets and option pricing valuation, where you apply option pricing to value businesses. With each approach, we talked about the types of assets that are best priced with that approach and what you need to bring as an analyst/investor to the table. For instance, in our discussion of DCF valuation and how to make it work for you, I suggested that there were two requirements: a long time horizon and the capacity to act as the catalyst for market correction. Since I mentioned Carl Icahn and Bill Ackman as hostile acquirers (catalysts), you may want to look at Herbalife, the company that Ackman has targeted as being over valued and Icahn did for being under valued. See if you can get a list going of how he is trying to be the catalyst for the correction... and think about the dark side of this process. We then started our discussion of intrinsic valuation, with a simple experiment on valuation, which led to three propositions about valuation. In the course of that discussion, I mentioned the weapons of mass distraction that people throw at us, as work through the numbers.
Start of the class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/biastest.pdf
Slides for the class: http://www.stern.nyu.edu/~adamodar/podcasts/valfall15/valsession2.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session2test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session2soln.pdf

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Chapter/Session 8: Cash Return (Dividends) across the Life Cycle

Fri, 17 Jul 2026 21:07:00 -0000

Session Description: If dividends represent residual cash flows, i.e., cash flows left over after every other need (taxes, reinvestment, debt payments) have been met, it stands to reason that the cash returned by a firm should reflect where it is in the life cycle. In this session, in addition to looking at cash return (potential and actual) as companies age, I also look at how the choice between dividends and stock buybacks can be affected a company's positioning in the life cycle.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch8.pdf
Exercise:
a.     How much cash (FCFE) could each of your firms have returned in the most recent year(s)?
b.     How much cash did your firms return in the most recent years?
c.     In what form (dividends or buybacks) was the cash returned, if at all?

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The Fed did it!

Fri, 17 Jul 2026 15:07:00 -0000

The Fed does not set rates, has had only a marginal role in keeping rates low and its effect on stock prices is debatable. Heresy, right? On the eve of another FOMC meeting, my views on central banking myths.
Blog post:http://aswathdamodaran.blogspot.com/2015/09/the-fed-interest-rates-and-stock-prices.html
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/feddidit.pdf

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Chapter/Session 7: Business Financing across the Life Cycle

Fri, 17 Jul 2026 09:07:00 -0000

Session Description: There are only two ways that a business can be fund itself - your own money (equity) and borrowed money (debt). In this session, I look at the tradeoffs - illusory, financial and friction-driven - that drive the trade off between debt and equity, and how it plays out across the life cycle. I move on to to look at the right type of debt a firm, as one that matches its assets, and use this insight to look at why debt design is different for growth as opposed to mature firms.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch7.pdf
Exercise:
a.     Evaluate the mix of debt and equity used by each of your companies to fund their businesses.
b.     If your company has debt, what type of debt does it have? (Debt maturity, currency, straight or convertible etc.)
c.     What tax benefits to each of your companies get from debt? (Look at marginal and effective tax rates, whether the company is making money, net operating losses carried forward)
d.     What is the expected bankruptcy cost from debt to each firm? (Look at volatility in earnings, current bond ratings if any, interest coverage ratios)?

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Chapter/Session 9: Valuation and Pricing 101

Thu, 16 Jul 2026 21:07:00 -0000

Session Description: In this session, I start by contrasting valuation, where we attach a number to an asset, based upon its cashflows, growth and risk, and pricing, where we decide how much to pay, based on what other investors are paying for similar assets. In the context of intrinsic valuation, I look at the drivers of value and then examine why the importance of the drivers can change as companies move through the life cycle, and in the context of pricing, I examine why pricing metrics and peer groups can shift across the life cycle.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch9.pdf
Exercise:
a.     Estimate the historical values for revenue growth, margins and reinvestment (sales to capital) for each of your firms.
b.     Estimate at least three pricing multiples for each of your firms, with a mix of equity and enterprise value ratios.
c.     Find peer group companies for each of your firms, with median (and average) values for the pricing multiples of your choice.

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The Macro Delusion and Pricing Bubbles: The Good, Bad and the Ugly!

Thu, 16 Jul 2026 15:07:00 -0000

In this webcast, I look at how big markets + over confidence can create over pricing, and why it is a natural part of markets. I use the social media companies as my sample, with the big online advertising market as the allure, to show how investors over price companies. However, I argue that this over pricing is a natural part of markets and that without these periodic spurts of over optimism, markets will become boring and economies stagnant.
Blog Post: bit.ly/1JBGHVx
Presentation: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/macrodelusion.pdf
Spreadsheet to compute imputed revenues:
http://www.stern.nyu.edu/~adamodar/pc/blog/BreakevenRevenueCalculator.xlsx
Folder with imputed revenue computations for social media firms:
http://www.stern.nyu.edu/~adamodar/pc/blog/BreakevenAug2015

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Chapter/Session 10: Valuing and Pricing Start-ups and Young High Growth Firms

Thu, 16 Jul 2026 09:07:00 -0000

Session Description: In this session, I look at why the absence of historical data, the lack of a working business model and the uncertainty about survival and success make valuation more challenging at young firms and start-ups, and why the payoff to making your best estimates, in the face of these challenges, is so large. I then examine the process of valuing and pricing a young firm or start-up, and techniques that can be used to face up to the uncertainty in your estimates.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch10.pdf
Exercise:
For the youngest company in your peer group:
a.     Given what you have learned about your company, what is your valuation story?
b.     Does your valuation story pass the 3P test?
c.     How does your valuation story play out in your valuation inputs (revenue growth, margins, reinvestment, and risk)?
d.     Given these valuation inputs, what is your valuation for the company?
e.     How uncertain are you about this valuation? How do you deal with this uncertainty?
f.      Is there any optionality in this company? If yes, why and what drives that option’s value?

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What is this class about?

Thu, 16 Jul 2026 03:07:00 -0000

A 2-minute introduction to what this class is about (and what it is not about)

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Chapter/Session 11: Valuing Growth Firms

Wed, 15 Jul 2026 21:07:00 -0000

Session Description: In this session, I examine the big questions involved in valuing high-growth firms, with established business models, but where the key question becomes one of whether and if yes, how much, a firm with strong past growth can continue to grow. I also look at pricing high growth firms, where the key difference to control for is in expected growth.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch11.pdf
Exercise:
For the high growth company in your peer group:
a.     Given what you have learned about your company, what is your valuation story?
b.     Does your valuation story pass the 3P test?
c.     How does your valuation story play out in your valuation inputs (revenue growth, margins, reinvestment, and risk)?
d.     Given these valuation inputs, what is your valuation for the company?
e.     How uncertain are you about this valuation? How do you deal with this uncertainty?
f.      What is the value that growth is adding (or destroying) in your company?

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Session 26: The Grand Finale

Wed, 15 Jul 2026 15:07:00 -0000

In this session, we review the material for the class using Dante's Inferno as a guide. We then look at the class using the project findings as lens.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/valclosespr15.pdf
Project summary: http://www.stern.nyu.edu/~adamodar/pc/eqrec/spr2015.xls

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Chapter/Session 12: Valuing Mature Firms

Wed, 15 Jul 2026 09:07:00 -0000

Session Description: With long financial histories, and settled business models, firms in their mature phase should be easiest to value and price. That said, in this session, I look at the questions of how best to deal with the effects of changing the management of a mature firm, as well as imminent disruption of the core business. I argue that all mature firms can be valued for the status quo (existing management) and with change, and that the expected value of control stems from the difference between the two values.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch12.pdf
Exercise:
For the mature company in your peer group:
a.     Given what you have learned about your company, what is your valuation story?
b.     Does your valuation story pass the 3P test?
c.     How does your valuation story play out in your valuation inputs (revenue growth, margins, reinvestment, and risk)?
d.     Given these valuation inputs, what is your valuation for the company?
e.     How uncertain are you about this valuation? How do you deal with this uncertainty?

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Session 26: Closing and Review

Wed, 15 Jul 2026 03:07:00 -0000

In this session, I review the class using the class project findings as fodder.
Presentation: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/ProjSumm15.pdf
Project findings summary: http://www.stern.nyu.edu/~adamodar/pc/cfanalysis/cfspr15.xls

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Chapter/Session 13: Valuing and Pricing Declining Firms

Tue, 14 Jul 2026 21:07:00 -0000

Session Description: In this session, I argue that valuing declining firms is daunting, since the value you attach to a business is very much a function of whether you believe that the management of these firms is in denial, acceptance or actively working towards a rebirth. I also look at pricing a firm with declining revenues and margins under pressure is different, with both healthy and declining peer group companies in the mix.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch13.pdf
Exercise:
For the declining company in your peer group:
a.     Given what you have learned about your company, what is your valuation story?
b.     Does your valuation story pass the 3P test?
c.     How does your valuation story play out in your valuation inputs (revenue growth, margins, reinvestment, and risk)?
d.     Given these valuation inputs, what is your valuation for the company?
e.     How uncertain are you about this valuation? How do you deal with this uncertainty?

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Session 25: Value Enhancement

Tue, 14 Jul 2026 15:07:00 -0000

In this session, we look at ways to enhance value (as opposed to enhancing price) and how all restructuring can be viewed through the prism of intrinsic value.
Start of the class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/valenh.pdf
Slides
http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession25.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session25test.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session25soln.pdf

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Chapter/Session 14: Investment Philosophies 101

Tue, 14 Jul 2026 09:07:00 -0000

Session Description: In this session, I start by describing an investment philosophy as a set of beliefs about market behavior and misbehavior which translate into market mistakes that you try to exploit as an investor, and go on to contrast investment philosophies that are odds with each other - value versus growth investing, momentum versus reversal trading, market timing versus stock selection. I then look at how different investment philosophies lead you to companies at different stages in the life cycle, and why you should be aware of these links, as an investor.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch14.pdf
Exercise:
a.     Are you an active investor?
b.     If yes, what types of mistakes do you think markets make, and why? If no, why not?
c.     What investment strategies do you use (or plan to use) to take advantage of those mistakes?
d.     What are the weakest links in your investment philosophy/strategies?
e.     Do you have an investment track record? Have you earned more than you would have as a passive investor (buying index funds)?

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Session 25: More on valuation

Tue, 14 Jul 2026 03:07:00 -0000

In this session, we continued our discussion of valuation by looking at estimation growth rates and terminal value and rules to keep both in check. We finally brought all the numbers together in the valuations of Deutsche Bank, Vale, Tata Motors and Disney.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr15/cfsession25.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session25test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session25soln.pdf

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Chapter/Session 15: Investing in Youth

Mon, 13 Jul 2026 21:07:00 -0000

Session Description: In this session, I look at the investment philosophies (and strategies) most focused on young and high growth companies, starting with venture capital and then moving on to public market growth investors (and traders). I argue that to be successful with companies at this stage in the life cycle, you need to be a good judge of both narratives (company stories) as well as people (founders) and be willing to live with uncertainty and error.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch15.pdf
Exercise:
a. If you had the capital and the capacity, do you think you would be a successful venture capitalist? If yes, why? If no, why not?
b. As a public market investor, what approach to investing in growth companies offers the best odds for you? Why?

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Session 24: Acquisition Valuation

Mon, 13 Jul 2026 15:07:00 -0000

In this session, we start by looking at the sorry history of acquisitions to acquiring firms and then examine common errors in acquisition valuation.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/realoptions2mod.pdf
http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession24.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session24test.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session24soln.pdf

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Chapter/Session 20: Lessons for the Road

Mon, 13 Jul 2026 09:07:00 -0000

Session Description: In this session, I wrap up by looking at lessons for managers, as companies make their way through the life cycle, as well as for investors, navigating the same path. I end with suggestions for regulators and policy makers on how to approach disclosure and corporate governance for firms at different stages in the life cycle.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch20.pdf
Exercise:
Given what you have learned about each of your five companies across the dimensions, has your view about where each of them falls in the life cycle changed? If yes, in what way and why?

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Session 24: Closing the books on dividends and First steps on value

Mon, 13 Jul 2026 03:07:00 -0000

In this session, we put the closing touches to dividend policy and began our discussion of valuation by pointing to the importance of narrative as a driver of value.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr15/cfsession24.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session24test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session24soln.pdf

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Chapter/Session 19: Aging with grace!

Sun, 12 Jul 2026 21:07:00 -0000

Session Description: In this session, I look at the choices that managers face when put in charge of declining firms, starting with acceptance (where they accept aging and act accordingly) and why management fights that path so much. I also look at the more alluring paths of revamps and rebirths, with examples of success, but with cautionary notes on difficulties on those paths.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch19.pdf
Exercise:
For the declining company in your group
a.     What would denial look like (in terms of investing, financing and cash return policies?
b.     What would acceptance look like (in terms of investing, financing and cash return policies)?
c.     What would a revamp/rebirth look like (in terms of investing, financing and cash return policies)?
d.     Which of the above paths is the management currently running the company most likely to pick?

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Chapter/Session 18: Managing across the life cycle

Sun, 12 Jul 2026 09:07:00 -0000

Session Description: In this session, I look at what top managers in businesses do, and how the skill sets annd mindsets you need in these managers will change as a company moves through the life cycle, turning on its head the notion that there is one prototype for a "great CEO". I also argue that a mismatch between a firm and its top management can be value-destructive, and that the odds of this mismatch have increased as company life cycles get compressed.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch18.pdf
Exercise:
a.     Who is the CEO of each of your companies? How long has he/she been CEO and how did he/she get the position (founder, hired from outside, hired from inside)?
b.     Is your CEO matched to your company?
c.     If there is a mismatch, is there a response building to that mismatch (activist investors, proxy challenges)?

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In Practice Webcast #13: Dividend Assessment

Sun, 12 Jul 2026 03:07:00 -0000

In this session, I look at the process of estimating potential dividends or FCFE and comparing it to cash return, with the intent of asking whether the policy needs to be changed.
Presentation:http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/dividends/dividendassessment.pdf
Spreadsheet:http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/dividends/IntelDividends.xls
Annual Report: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/dividends/IntelAnnualReport.pdf
Historical data: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/dividends/IntelBloomberg.pdf

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Chapter/Session 17: Investing in Decline

Sat, 11 Jul 2026 21:07:00 -0000

Session Description: In this session, I look at the investor groups, especially private equity and activists, who try to make their money by targeting companies in decline. In some cases, they do so, because the price is attractive, and in others, because they think that breaking up or even liquidating the firm can deliver more value than continuing as going concerns.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch17.pdf
Exercise:
a. If you had the capital and the capacity, do you think you would be a private equity investor? If yes, why? If no, why not?
b. As a public market investor, what approach to investing in declining companies offers the best odds for you? Why?

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In Practice Webcast #12: The Trade off on Dividends

Sat, 11 Jul 2026 15:07:00 -0000

In this webcast, I look at how to assess whether a company should initiate and increase dividends, using Intel as an example.
Presentation: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/dividends/dividendtradeoff.pdf

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Chapter/Session 16: Investing in Middle Age

Sat, 11 Jul 2026 09:07:00 -0000

Session Description: In this session, I look at value investing, at least as practiced by many in the space, as focused primarily on middle aged firms, trading at attractive prices. While value investing has an appealing mix of story and numbers, I look at the returns earned by value investors and find little cause for celebration. Active value mutual funds underperform value index funds by more than active growth mutual funds underperform their index counterparts. While there are pockets of outperformance among individual and activist value investors, the overall conclusion that I reach is that active value investing does not deliver on its promise. We close the session by looking at possible reasons for this gap between promise and practice.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch16.pdf
Exercise:
a. If you had the capital and the capacity, do you think you would be an activist value investor? If yes, why? If no, why not?
b. As a public market investor, what approach to investing in mature companies offers the best odds for you? Why?

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Session 23: Valuing flexibility and distressed equity as options

Sat, 11 Jul 2026 03:07:00 -0000

In this session, we extend the option pricing approach to value flexibility in projects and financing and to value distressed equity.
Start of the class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/realoption2mod.ppt
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/realoptions2mod.pdf
http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession23.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session23test.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session23soln.pdf

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Beat you Bot: Building your moat against AI!

Fri, 10 Jul 2026 21:07:00 -0000

As the AI buzz has carried markets and unsettled businesses, with the threat of disruption, the threat of personal disruption also looks. We are being told that AI is coming for our jobs, and for me, that threat became real when I learned of a bot in my name that had read and listened everything that I have ever written or said. In this session, I look at where the AI threat is greatest (mechanical, rule-driven and objective) and what we can do to keep the threat at bay - broaden our horizons, strengthen reasoning skills, work on our weak sides and let our minds wander.
Blog post: https://aswathdamodaran.blogspot.com/2024/08/beat-your-bot-building-your-moat.html

P.S: During the session, I mentioned Galileo sitting under the apple tree. I meant to say Newton... I am sure my Bot would not have made that mistake.

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Session 23: Dividends, Potential Dividends and Cash Balances

Fri, 10 Jul 2026 15:07:00 -0000

In this session, we looked at the process of comparing dividends and FCFE and making judgments on whether to trust managers with our cash.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr15/cfsession23.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session23test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session23soln.pdf

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The Power of Expectations: Nvidia's Earnings Report and Market Reaction

Fri, 10 Jul 2026 09:07:00 -0000

On August 28, 2024, Nvidia reported its second quarter earnings, and on the face of it, the numbers were dazzling. Revenues were up 122% from the same quarter the previous year, gross margins exceeded 75% and operating margins were 60%+, and the numbers exceeded analyst expectations. The stock price dropped 8% in the aftermath, and has continued to decline, wiping out more than $400 billion in market cap in the week since. I use this session to look are earnings releases, in general, exploring the expectations game, and Nvidia's in particular. I also look at the information that earnings reports contain for traders (about mood and momentum) and for investors (about growth, profitability and risk). I close by revisiting my Nvidia story, in light of the report, and revaluing the company.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/Nvidia2024.pdf
Blog post:
Nvidia quarterly earnings: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001045810/78501ce3-7816-4c4d-8688-53dd140df456.pdf
Valuation of Nvidia: https://pages.stern.nyu.edu/~adamodar/pc/blog/Nvidia2024.xlsx

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Session 22: Natural Resource Options and the Option to Expand

Fri, 10 Jul 2026 03:07:00 -0000

In this session, we looked at undeveloped reserves in natural resource companies and expansion potential (into new markets) as options.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession22.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22test.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22soln.pdf

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Dealing with Decline: Intel, Walgreens and Starbucks put to the test!

Thu, 09 Jul 2026 21:07:00 -0000

If you accept the notion that companies age and move through the life cycle, managing and investing becomes most challenging for companies in decline. Faced with that prospect, companies often go into denial, resort to desperation or become walking dead companies. Some accept aging gracefully, a few revamp themselves and even fewer find reincarnation. In this session, I look at three high profile companies that have fallen from market grace - Intel, Walgreens and Starbucks - and examine where they fall in the life cycle, and what choices make the best sense for them
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/Decline2024.pdf
Blog post: https://aswathdamodaran.blogspot.com/2024/09/dealing-with-aging-daignosing-intel.html
Valuations:
1. Intel: https://pages.stern.nyu.edu/~adamodar/pc/blog/Intel2024.xlsx
2. Walgreens: https://pages.stern.nyu.edu/~adamodar/pc/blog/Walgreens2024.xlsx
3. Starbucks: https://pages.stern.nyu.edu/~adamodar/pc/blog/Starbucks2024.xlsx

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Session 22: The Trade off on Dividend Policy

Thu, 09 Jul 2026 15:07:00 -0000

In this session, I look at the conditions under which dividends have no effect on value, a negative effect and a positive effect, and loo at good and bad reasons for paying dividends.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr15/cfsession22.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session22test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session22soln.pdf

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Fed up with Fed Talk: Central Banking Fairy Tales and Facts!

Thu, 09 Jul 2026 09:07:00 -0000

In the aftermath of the Fed's decision to lower the Fed Funds rate by half a percent on September 16, 2024, I looked at widely held myths about the Fed (and central banks, in general) - that they set interest rates (they don't), that they are market leaders (they are followers), that they send signals to investors and businesses (they do, but they are murky) and that they are stock market whisperers (not true). I use the data on Fed Funds rates, interest rates and stock prices to make my case, but the bottom line is that the Fed's power comes from the perception that it has power, rather than its capacity to move markets.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/FedDelusions.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2024/09/fed-up-with-fed-talk-central-banks.html
Data on Fed Funds rates, interest rates and stock prices: https://pages.stern.nyu.edu/~adamodar/pc/blog/FedIntRates.xlsx

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In Practice Webcast #11: Designing Debt

Thu, 09 Jul 2026 03:07:00 -0000

In this session, I look at the process of designing the right debt for a company.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/debtdesign/debtdesign.pdf
Spreadsheet: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/debtdesign/WMTmacrodur.xls
Data: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/debtdesign/WMTFAsummary.pdf

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Just do it! Brand Name Lessons from Nike's Troubles!

Wed, 08 Jul 2026 21:07:00 -0000

Reading "Shoe Dog", Phil Knight's memoir that describes how he went from an Oregon track team to creating one of the great brand names in the world, provides insights into the perspiration involved in building a business and the mysteries of brand name value. In this session, I start by defining a brand name as something that changes how customers, employees and capital providers interact with a company, and then lay out a framework for valuing a brand name (with both the layup example with Coca Cola, a more complex one with Birkenstock and a Nike update). I also look at how great brand names get built and the role of fortuitous choices (Nike's name, symbol and slogan) on value, and what caused great brand names to dissipate over time.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/BrandName2024.pdf
Blog post: https://aswathdamodaran.blogspot.com/2024/10/just-do-it-brand-name-lessons-from.html
Valuations/Data links:
1. Coca Cola in 2024: https://pages.stern.nyu.edu/~adamodar/pc/blog/CocaCola2024.xlsx
2. Nike in 2024: https://pages.stern.nyu.edu/~adamodar/pc/blog/Nike2024.xlsx
3. Industry distributions for revenue growth and margins: https://pages.stern.nyu.edu/~adamodar/pc/blog/IndustryDistribution2024.xlsx

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Session 21: Real Options - Introduction and Valuing Patents

Wed, 08 Jul 2026 15:07:00 -0000

In today's session, we tried applying (with mixed results) option pricing to value a patent. We argued that the fact that a patent is not viable today does not imply that the patent is not valuable. Valued as an option, patents have values in excess of their discounted cash flow value, though the magnitude of the premium can be a function of how competitive the market place is. In general, you are on pretty weak ground in using option pricing to value viable patents but it may be more useful in valuing non-viable patents in risky businesses.I have attached an option valuation spreadsheet that you can use to value patents as well as the post class test & solution.
Start of the class test:http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/realoption1.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession21.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session21test.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session21soln.pdf

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A Big Tech Breakup: Cui Bono?

Wed, 08 Jul 2026 09:07:00 -0000

On October 9, the government signaled that it may try to break up Alphabet, and while that may be a negotiating ploy, it is part of an ongoing debate about big tech companies, whether they have become too big and if so, what to do about them. In this session, I start with a short history of antitrust law in the United States and the enforcement tools available to the government. I then look at the pros and cons of applying those tools to big tech , from breaking them up, to treating them as regulated monopolies to putting in restraints on how they do business and doing nothing. At the risk of taking an unpopular position, I believe that big tech is getting "too big", but also that doing nothing may be best for consumers and even for competitors.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/BigTech.pdf
Blog post: https://aswathdamodaran.blogspot.com/2024/10/breaking-up-big-tech-cui-bono.html

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Session 21: Debt Design and First Steps on Dividends

Wed, 08 Jul 2026 03:07:00 -0000

In this session, we completed our discussion of debt design and how to fix the problem of mismatched debt. We then turned our attention to dividend policy by looking at firm behavior across time and across the life cycle.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr15/cfsession21.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session21test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session21soln.pdf

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The Sugar Daddy Effect? Corporate Venture Capital, Sovereign Wealth Funds and Green Investing!

Tue, 07 Jul 2026 21:07:00 -0000

The sugar daddy (or molasses mommy) effect becomes a factor when you have a bountiful benefactor who covers all your funding needs, and it is at play at CVCs, SWFs and in green investing, with parent companies, governments and impact investors playing the sugar daddy role. I look at the missions and magnitude of each of these investing groups, and argue that, at least in the aggregate, they punch well below their weight. While the very best in each of these groups matches up to the best in the peer groups (VCs for CVCS, actively managed funds for SWFs and energy funds for green investing), the under performance in the aggregate can be traced to the unwillingness to shut down the worst performers. Independent, transparency, clearer mission statements with guardrails on side missions, and a willingness to euthanize under-perfomers provide the pathway to success.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/SugarDaddy.pdf
Blog post: https://aswathdamodaran.blogspot.com/2024/10/the-sugar-daddy-effect-corporate.html

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Session 20: Valuing Private Business (for sale and IPO)

Tue, 07 Jul 2026 15:07:00 -0000

In this session, we look at ways of dealing with the challenges of factoring in illiquidity and lack of diversification in private businesses as well as valuation for an IPO.
Start of the class test:http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/pvtco2Modtest.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession20.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session20test.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session20soln.pdf

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The Wisdom (and Madness) of Crowds: Political Markets as Election Predictors!

Tue, 07 Jul 2026 09:07:00 -0000

Leading into the US presidential election in 2024, you had your usual gaggle of polls, poll aggregators and polling experts, all facing existential challenges in terms of sampling bias and credibility. Much as we like to complain, though, we all like predictors of who is up (preferably the candidate we like) and who is down (preferably the other candidate), and political markets like Polymarket and Kalshi stepped into the fray. In addition to providing dynamic and updated likelihoods of winning, they became part of the political discourse as both sides of the divide drew attention to market movements in their favor. In this session, I look at the political markets in the larger context of a shift in how we get the information we use to make choices on what to watch, where to eat and even what is going on from professional sources (movie and restaurant reviews, newspapers & TV) to crowds (Rotten Tomatoes, Yelp and social media). Drawing on research that we have on financial markets (which is essentially a long-lived crowd sourced estimate of value), I examine the conditions where the crowd or market judgment is wise. I am a realist, though, and there is the very real possibility that crowds can go mad in their judgments, driven by herd behavior and emotion, and I look at the conditions that give rise to that madness, as well. I end the session by looking at the trade off between the good (wisdom of crowds) and the bad (madness of crowds), and while I conclude that the net is positive, I suggest caution in how we use market (and crowd) judgments.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/PolMkts.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2024/11/the-wisdom-and-madness-of-crowds.html
Political Markets:
Polymarket: https://polymarket.com
Kalshi: https://kalshi.com/events/elections

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Session 20: Moving to Optimal and Designing the Right Debt

Tue, 07 Jul 2026 03:07:00 -0000

In this session, we look at how quickly and how to move to the optimal and followed up by designing the perfect financing for a company.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr15/cfsession20.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session20test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session20soln.pdf

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The Siren Song of Sustainability: The Theocratic Trifecta's Third Leg!

Mon, 06 Jul 2026 21:07:00 -0000

In this session, I look at the rise of corporate sustainability as a business imperative, both in practice and academia, and argue that it shares many characteristics with ESG, a concept that has drawn fire justifiably for over promising and under delivering. Both concepts (ESG & Sustainability) are opaque, have their roots in virtue, emphasize disclosure and standards over actions and underplay or ignore the sacrifice that is inherent in businesses aspiring to do good. I also look at what needs to happen for sustainability to be salvaged starting with being clear eyes about the activities that businesses can be called upon to take and the costs of these activities and cleaning out the gravy train of grifters who have made this space their own.
Slides: https://pages.stern.nyu.edu/~adamodar/pdf/blog/Sustainability.pdf
Blog post:

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In Practice Webcast #10: Estimating an Optimal Debt Ratio

Mon, 06 Jul 2026 15:07:00 -0000

In this webcast, I go through the process of using the cost of capital approach to optimizing capital structure. I use Dell (from 2013) as my example and my capital structure spreadsheet.
Dell 10K: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/optdebt/dell10K2013.pdf
Spreadsheet: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/optdebt/dellcapstru.xls

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For the fun of it: An Open House for my Spring 2025 Classes

Mon, 06 Jul 2026 09:07:00 -0000

At the start of every year, for the last two decades, I have invited people to partake in the classes that I teach at the Stern School of Business at NYU. As the spring 2025 semester approaches, and I get ready to teach corporate finance (to Stern MBAs) and valuation (to MBAs and undergrads in separate classes), I renew that invite. While you will not be able to physically sit in on those classes, if you are not an enrolled or registered NYU students, you can watch the recorded lectures, access the class material and even take the exams, if you are so inclined. I also have other online classes on investment philosophies, corporate finance, accounting and statistics, that you can sample. You will get no certification, but it is free! If you do want certification, NYU offers certificate versions of some of the classes, albeit with a price tag. I hope to see you in class!
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/Teaching2025.pptx
Blog post:
Links to classes:
Corporate Finance (NYU MBA): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcastcfspr25.htm
Valuation (NYU MBA): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcasteqspr25.htm
Corporate Finance (Free Online): https://pages.stern.nyu.edu/adamodar/New_Home_Page/webcastcfonline.htm
Valuation (Free Online): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcastvalonline.htm
Corporate Finance (NYU Certificate): https://execed.stern.nyu.edu/products/corporate-finance-with-aswath-damodaran
Valuation (NYU Certificate): https://execed.stern.nyu.edu/products/advanced-valuation-with-aswath-damodaran
Investment Philosophies (Free Online): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcastinvphil.htm
Investment Philosophies (NYU Certificate): https://execed.stern.nyu.edu/products/investment-philosophies-with-aswath-damodaran
Corporate Life Cycle (Free Online): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcastCLC.htm
Accounting 101 (Free Online): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcastacctg.htm
Foundations of Finance (Free Online): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcastfoundationsonline.htm
Statistics 101 (Free Online): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcaststatistics.htm

WhatsApp Groups for Classes
Corporate Finance: https://chat.whatsapp.com/C0yjIAWT2WdLozCHYctU9p
Valuation: https://chat.whatsapp.com/LjQBQXcbyh11I17idz176k
Investment Philosophies: https://chat.whatsapp.com/IolVsa3qScLJecUtu4uUKO
Corporate Life Cycle: https://chat.whatsapp.com/J1V0vwFkIUoCblYp4J3ENs

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Session 19: Choosing the right multiple, asset based valuation

Mon, 06 Jul 2026 03:07:00 -0000

In this session, we look at how to choose the right multiple to use in pricing a business and at asset based valuation, in the context of liquidation, accounting and sum-of-the-parts valuation.
Start of the class test:http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/pvtcotest.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession19.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session19Atest.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session19Asoln.pdf

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Data Update 1 for 2025: The Draw (and Dangers) of Data!

Sun, 05 Jul 2026 21:07:00 -0000

We live in an age of data, where companies and investors seem to believe that data (with an assist from AI) can answer any question. I believe that data can help us make better decisions, but I don't believe that it can make those decisions, without the guidance of common sense and perspective. Every year, for the last three decades, I have collected data on all publicly traded companies in the world, and analyzed and aggregated the data to provide industry averages on dozens of corporate finance and valuation-related variables. The 2025 data update is now up and running, and I hope that you find a use for it somewhere in your work.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate1for2025.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2025/01/data-update-1-for-2025-draw-and-danger.html
Link to data: https://people.stern.nyu.edu/adamodar/New_Home_Page/datacurrent.html

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Session 19: APV and Relative Analysis - Capital Structure

Sun, 05 Jul 2026 15:07:00 -0000

In this session, we look at the determinants of optimal debt ratios in the cost of capital approach, the APV approach and how to gauge a company's debt ratio relative to a sector.
Walgreens Optimal: http://www.stern.nyu.edu/~adamodar/pc/blog/walgreenscapstru.xls
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr15/cfsession19.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session19test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session19soln.pdf

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Data Update 2 for 2025: The Party Continued for US Equities

Sun, 05 Jul 2026 09:07:00 -0000

In this session, I report on another banner year for US equities, with the S&P 500 delivering a return of 24.88% for the year. I put this return in historical context (the 27th best year out of the last 97 years), as well as the two-year return of 57.42%, from 2023 and 2024 (the tenth best two-year return in the last century). After looking at the premiums you would have earned on stocks, relative to treasuries in 2024 and over history, I then turn to how the index is priced at the start of 2025. The PE ratio (using trailing, normalized or CAPE) is higher than historical norms, and the earning yield (EP) exceeded the ten year treasury rate at the start of 2025. While those are red flags, I present a fuller measure of a forward-looking ERP for the market, and argue for some nuance in how you read the numbers.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate2for2025.pdf
Blog post: https://aswathdamodaran.blogspot.com/2025/01/data-update-2-for-2025-party-continued.html
Spreadsheets:
1. Historical returns on stocks: https://pages.stern.nyu.edu/~adamodar/pc/datasets/histretSP.xlsx
2. Implied ERP at the start of 2025: https://pages.stern.nyu.edu/~adamodar/pc/implprem/ERPJan25.xlsx
3. Historical implied ERP: https://pages.stern.nyu.edu/~adamodar/pc/datasets/histimpl.xls
Valuation of the index
Spreadsheet: https://pages.stern.nyu.edu/~adamodar/pc/blog/S&PValueJan2025.xlsx

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Session 18: Applying Multiples and Market Regressions

Sun, 05 Jul 2026 03:07:00 -0000

In this session, I continue to look at how to use multiples to price companies and control for differences, especially for young firms and across the entire market.
Start of the class test:http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relval3atest.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession18.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session18test.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session18soln.pdf

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Session 1: Class Logistics and Structure

Sat, 04 Jul 2026 21:07:00 -0000

We are officially rolling and class is in session. During this introductory session, I told you that that this was a class about valuation in all of its many forms – different approaches (intrinsic, relative & contingent claim), different forums (for acquisitions, value enhancement, investing) and across different types of businesses (private & public, small and large, developed & emerging market). After spending some time laying out the script for the class (quizzes, exams, weekly tortures), I laid out the philosophical foundations for valuation, by noting that it is a bridge between story and numbers and that it is different from pricing.
Start with a self test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/firstclass.pdf
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/eqUGsyllspr25.pdf (Syllabus)
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session1test.pdf
Post class session: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session1soln.pdf

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Session 18: More on the Cost of Capital Approach to Optimizing Financing Choices

Sat, 04 Jul 2026 15:07:00 -0000

In this session, I continue the discussion of the cost of capital approach by looking at the value effect of moving to the optimal and building in buffers. I then extend the approach to a family group company (Tata Motors), a mining company (Vale), a emerging market tech company (Baidu) and to a private business.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr15/cfsession18.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session18test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session18soln.pdf

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Data Update 3 for 2025: The times they are a'changin...

Sat, 04 Jul 2026 09:07:00 -0000

In 2024, the US equity indices were up strongly, but not all groupings of stocks shared in the spoils. In this session, I slice US equities down, first by sectors and industries, to identify winners and losers in 2024. I follow up by breaking down companies by market capitalization, into small and large, and argue that the small cap premium, a staple for both valuation practitioners and investors, has disappeared in the last five decades. I also look at stocks broken down by price to book, a simplistic proxy for value, and argue that the value premium has also gone into hibernation. Since momentum is pointed to as a culprit for the fading of both the small cap and value premiums, I finally look at stock returns in 2024, with stocks classified by momentum. If there is a core message in the data, it is that investing and valuation practices based upon historical data and a trust in mean reversion are becoming indefensible. As Bob Dylan would put, "the times they are a'changig", and we need to change with them.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate3for2025.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2025/01/data-update-3-for-2025-slicing-and.html
Data links:
1. My small cap premium calculator (using Ken French data): https://pages.stern.nyu.edu/~adamodar/pc/blog/SmallCapPremiumTest.xlsx
2. My value premium calculator (using Ken French data): https://pages.stern.nyu.edu/~adamodar/pc/blog/ValuePremiumHistory.xlsx

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Introduction to Valuation Session

Sat, 04 Jul 2026 03:07:00 -0000

In this session, I look at the big picture questions that I try to address in the course of a valuation class/session.

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Session 1: Class themes, structure and logistics

Fri, 03 Jul 2026 21:07:00 -0000

In this, the very fist session of the class, I laid out the structure for the class and an agenda of what I hope to accomplish during the next 15 weeks. In addition to describing the logistical details, I presented my view that corporate finance is the ultimate big picture class because everything falls under its purview. The “big picture” of corporate finance covers the three basic decisions that every business has to make: how to allocate scarce funds across competing uses (the investment decision), how to raise funds to finance these investments (the financing decision) and how much cash to take out of the business (the dividend decision). The singular objective in corporate finance is to maximize the value of the business to its owners. This big picture was then used to emphasize five themes: that corporate finance is common sense, that it is focused, that the focus shifts over the life cycle and that you cannot break first principles with immunity.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/cfsyllspr25.pdf
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session1test.pdf
https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session1soln.pdf

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Introduction to corporate finance session

Fri, 03 Jul 2026 15:07:00 -0000

I describe, in very brief terms, what I try to cover in a corporate finance session and why it matters.

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Session 1: Class themes, structure and sequence

Fri, 03 Jul 2026 09:07:00 -0000

During this introductory session, I told you that that this was a class about valuation in all of its many forms – different approaches (intrinsic, relative & contingent claim), different forums (for acquisitions, value enhancement, investing) and across different types of businesses (private & public, small and large, developed & emerging market). After spending some time laying out the script for the class (quizzes, exams, weekly tortures), I suggested that you start thinking about forming a group and picking companies.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/eqsyllspr25.pdf
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session1test.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session1soln.pdf

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In Practice Webcast #9: The Trade off on Debt

Fri, 03 Jul 2026 03:07:00 -0000

In this session, we look at the trade off on debt, by looking at the costs and benefits of debt.
Presentation: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/tradeoffdebt/debttradeoff.pdf
Spreadsheet: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/tradeoffdebt/tradeoffHP.xls
Marginal Tax Rates: http://www.stern.nyu.edu/~adamodar/pc/datasets/countrytaxrates.xls
Industry-Average Tax Rates: http://www.stern.nyu.edu/~adamodar/pc/datasets/taxrate.xls

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Session 17: The cost of capital approach to optimizing financing mix

Thu, 02 Jul 2026 15:07:00 -0000

In this session, we started on how the cost of capital approach can be used to optimize the right mix of debt and equity for a firm, using Disney as an example.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr15/cfsession17.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session17test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session17soln.pdf

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Data Update 4 for 2025: Interest Rates, Inflation and the Fed!

Thu, 02 Jul 2026 09:07:00 -0000

In this session, I look at movements in interest rates in 2024, starting with US treasuries and then moving on to corporates. While the conventional wisdom at the start of 2024 was that rates would come down, powered by the Fed cutting rates, treasury rates increased for all but the shortest end of the maturity spectrum. Rather than make the Fed the arbiter for all things interest-rate related, I present an intrinsic risk free rate, where I argue that much of the movements in interest rates over time are explained by changing inflation and real growth, not the Fed. In the corporate bond rate section, I chronicle default spreads across 2024, and tie their decline to the decline in the equity risk premium. I also look at the how the fading of fear in the bond market has led to the return of high-yield bond issuances that had dropped to almost nothing in 2022.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate4for2025.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2025/01/data-update-4-for-2025-interest-rates.html
Data:
1. Intrinsic risk free rates and Nominal interest rates: https://pages.stern.nyu.edu/~adamodar/pc/datasets/intrinsicvsactualrate25.xlsx
2. Bond Default Spreads and Equity Risk Premiums:
https://pages.stern.nyu.edu/~adamodar/pc/datasets/baayldvsERP.xlsx

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Session 17: Analyzing multiples (contd) and applying multiples

Thu, 02 Jul 2026 03:07:00 -0000

In this session, we continued our discussion of multiples by looking at PEG and PBV ratios, as well as EV multiples. We examined how understanding the drivers of these multiples allows us to ask the right questions.
Start of the class test:http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relval2btest.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession17.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session17Atest.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session17Asoln.pdf

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Session 2: The End Game in Business

Wed, 01 Jul 2026 21:07:00 -0000

In thisclass, we started on what the objective in running a business should be. While corporate finance states it to be maximizing firm value, it is often practiced as maximizing stock price. To make the world safe for stock price maximization, we do have to make key assumptions: that managers act in the best interests of stockholders, that lenders are fully protected, that information flows to rational investors and that there are no social costs. We started on why one of these assumptions, that stockholders have power over managers, fails and we will continue ripping the Utopian world apart next class.
Slides: https://nyu.box.com/s/rwq8xrgd2b0j5jqqoy4l5tie42ybq9hk
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session2test.pdf
https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session2soln.pdf

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Session 16: Describing and Analyzing Multiples

Wed, 01 Jul 2026 15:07:00 -0000

In this post-quiz session, we continue to look at multiples, first focusing on their distributional characteristics and then developing a way of deconstructing them (to identify that variables that cause them to change or be different across companies).
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession16.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session16Atest.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session16Asoln.pdf

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Session 2: The Bermuda Triangle of Valuation

Wed, 01 Jul 2026 09:07:00 -0000

Today's class started with a test on whether you can detect the direction bias will take, based on who or why a valuation is done. The solutions are posted online on the webcast page for the class. Bringing in the effects of uncertainty and complexity, I argued that these three (bias, uncertainty and complexity) forces are the biggest challenges to good valuation. In fact, they represent the Bermuda Triangle of Valuation, a place where good sense goes to disappear. If you have the time to watch a much, much longer version of this topic, try this:
https://www.youtube.com/watch?v=-lL5qj_h1RE
We then moved on to talk about the three basic approaches to valuation: discounted cash flow valuation, where you estimate the intrinsic value of an asset, relative valuation, where you value an asset based on the pricing of similar assets and option pricing valuation, where you apply option pricing to value businesses. With each approach, we talked about the types of assets that are best priced with that approach and what you need to bring as an analyst/investor to the table. For instance, in our discussion of DCF valuation and how to make it work for you, I suggested that there were two requirements: a long time horizon and the capacity to act as the catalyst for market correction. We will be starting on the first lecture note packet on Monday. So, please have it downloaded and ready to go.
Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/biasshort.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/ValIntroSpr25.pdf
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session2atest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session2asoln.pdf

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Session 16: The Debt Equity Trade off

Wed, 01 Jul 2026 03:07:00 -0000

In this session, we examine the costs and benefits of borrowing money and lay the groundwork for determining the optimal mix of debt and equity for a company.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr15/cfsession16.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session16test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session16soln.pdf

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Session 3: Valuation approaches (continued) and first steps on intrinsic value

Tue, 30 Jun 2026 21:07:00 -0000

We started class by completing the discussion of approaches to valuation, talking about pricing and real options, at least in a big picture sense. We then began our intrinsic value discussion by talking about the weapons of mass distraction. If you want to read the blog post I have on the topic, try this link:
http://aswathdamodaran.blogspot.com/2014/03/if-it-is-strategic-growth-investment-in.html
We then spent some time setting up the process of discounted cash flow valuation, arguing for consistency in discounting. If the cash flows that you are discounting are cash flows to equity, estimated either as dividends or as potential dividends, the discount rate should be the cost of equity. If the cash flows that you are discounting are pre-debt cash flows, i.e,, cash flows to the firm, the discount rate has to be the cost of capital. Done right, the value of equity should be equivalent with both approaches. We also introduced “The IT propositon’ arguing that for it (control, synergy, AI or ESG) to affect value, it has to affect either the cash flows or the discount rate.
https://www.swfinstitute.org/fund-manager-rankings/activist-investor
Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/kennecott.pdf
Slides: https://nyu.box.com/s/7p11ugta057amfnko6er4uaehmimi7x9
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session3atest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/sessio3asoln.pdf

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In Practice Webcast #8: Analyzing a typical project

Tue, 30 Jun 2026 15:07:00 -0000

In this webcast, I look at the process of identifying what a typical project for a company looks like, with the intent of understanding its risk and designing the right type of financing for it.
Presentation: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/typicalproject.pdf

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DeepSeek crashes the AI Party: Story break, change or shift?

Tue, 30 Jun 2026 09:07:00 -0000

Until last weekend, i.e., pre-DeepSeek, the AI story was one built on three pieces - that the AI product/service market would be huge (trillions of dollars), that it would require a huge entry fee (in investments in super computing and at a) and that this entry fee would create an end game, where relatively few companies with pricing power would generate super-normal profits. That story has had enough force behind it to push up the market capitalizations of the companies that are actors in this story (from AI architecture companies like Nvidia, Vistra and Constellation Energy to firms in AI product and service space like Palantir) trillions of dollars.
The big story with DeepSeek is that it alters the AI story in a fundamental way, by opening up a pathway into the business without the massive investments in AI chips and data. That, in turn, has the potential of commoditizing the end market for AI products and services, with lots of competition and much less in profits. In my view, speaking as an AI novice, DeepSeek will create a bifurcated market for AI products and services, with a low-grade AI segment (composed of products that don't need super computers and data) and a high-intensity AI segment, with very different characteristics in terms of competition and profitability.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DeepSeek.pdf
Blog post: https://aswathdamodaran.blogspot.com/2025/01/deepseek-crashes-ai-party-story-break.html
Valuations:
1. Nvidia in September 2024: https://pages.stern.nyu.edu/~adamodar/pc/blog/Nvidia2024.xlsx
2. Nvidia in January 2025:
https://pages.stern.nyu.edu/~adamodar/pc/blog/NvidiaJan2025.xlsx

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Session 15: Valuing Cyclical Companies, Value and Price and first steps on Relative Value

Tue, 30 Jun 2026 03:07:00 -0000

In this session, we completed our discussion of the dark side of valuation by talking about companies with intangible assets and commodity/cyclical companies. We then moved on to examine why value and price can deviate and closed with an introduction to relative valuation:
Start of the class test:http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relval1test.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession15a.pdf
http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession15b.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session15Atest.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session15Asoln.pdf

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Session 3: Corporate Governance - Power abhors a vacuum!

Mon, 29 Jun 2026 21:07:00 -0000

In this session, we spent almost a large chunk of out time on the assessment of where the power lies in a company. In the utopian world, the power lies entirely with shareholders, but in the real world, that is not often the case. It can lie with managers, if shareholdings are diffuse and shareholders are passive. It can lie with a subset of inside shareholders, who have large holdings and/or are part of incumbent management. In some cases, that power can come from having voting and non-voting shares. It can lie with governments, lenders or employees. The first step in understanding why a company does what it does is to assess the power structure, and I suggested that you look at the largest shareholders in the company. Check out the percent of shares held by insiders (includes founders, managers and individuals owning more than 5%) and by institutions. We also looked at why bondholders who choose to not protect themselves are exposed, and market inefficiencies and "short termism".
Slides: https://nyu.box.com/s/8ntguvst601pnc3ev2sfd2z006w2ga1t
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session3atest.pdf
https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session3asoln.pdf

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Session 14: More on the Dark Side (Emerging Market, Financial Service and Transition Companies)

Mon, 29 Jun 2026 15:07:00 -0000

In this session, we started with companies going through transitions before moving on to emerging market companies and financial service companies.
n this session, I first look at valuing entire markets and then at the process for valuing young companies.
Start of the class test:http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/dcfvaltests3.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession14.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/session14Atest.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/session14Asoln.pdf

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Session 3: Valuation Introduction (completed) and Cashflow Consistency

Mon, 29 Jun 2026 09:07:00 -0000

This class started with a look at a major investment banking valuation of a target company in an acquisition and why having a big name on a valuation does not always mean that a valuation follows first principles, with the first principle being consistency, where your cash flows match up to your discount rates. We began our intrinsic value discussion by talking about the weapons of mass distraction. If you want to read the blog post I have on the topic, try this link:
favicon.ico
This post is dated, and the India story seems to have displaced the China story, and Sustainability, AI and the Metaverse have entered the conversation. The more things change, the more they stay the same! After setting the table for the key inputs that drive value - cash flows, growth, risk, we looked at the different ways of approaching valuation (Dividend Discount model, FCFE model, firm valuation) and the roots that they share, and how they result in different estimation processes. .
Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/kennecott.pdf
Slides: https://nyu.box.com/s/z0fr1vd7ypq0ffpjy9nydd4brnp2sj8z
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session3atest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session3asoln.pdf

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Session 14: Project interactions, side costs and benefits

Mon, 29 Jun 2026 03:07:00 -0000

In this session, we look at how choose between projects (with similar and different lives/scales) and to deal with project side costs and benefits.
Slides: http://www.stern.nyu.edu/~adamodara/podcasts/cfspr15/cfsession14.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session14test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session14soln.pdf

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Session 4: The DCF Big Picture and first steps on Riskfree rates

Sun, 28 Jun 2026 21:07:00 -0000

We started the class by completing a big picture perspective on discounted cash flow models, noting that while the way we get cash flows, growth rates and discount rates will vary, they are not only tied together with the same principles but require internal consistency. We started then with a discussion of risk and how it plays out in discount rates, before embarking on an assessment of riskfree rates, and with a discussion on whether the Fed sets rates and how to get riskfree rates in currencies where the government has default risk. I did mention, in passing, the possibility of negative riskfree rates and I do have a post on that:
http://aswathdamodaran.blogspot.com/2016/03/negative-interest-rates-unreal.html
If you want to see my updated perspective on risk free rates, try my blog post from this week::
https://aswathdamodaran.blogspot.com/2025/01/data-update-4-for-2025-interest-rates.html
Some of this post covers what we will do next week in class, but it is still a good big picture perspective. Also, the post class test and solution for today are attached.

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/riskfree.pdf
Slides:
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session4atest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/sessio4asoln.pdf

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Session 13: The Dark Side of Valuation (Valuing markets and young companies)

Sun, 28 Jun 2026 15:07:00 -0000

In this session, I first look at valuing entire markets and then at the process for valuing young companies.
Start of the class test:http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/dcfvaltests2.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession13.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/session13Atest.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/session13Asoln.pdf

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Session 4: Closure on the End Game - Stakeholders, Sustainability and ESG

Sun, 28 Jun 2026 09:07:00 -0000

The objective function matters, and there are no perfect objectives. That is the message of the last two classes. Once you have absorbed that, I am willing to accept the fact that you still don't quite buy into the "maximize value" objective. That is fine and I would like you to keep thinking about a better alternative with three caveats. First, you cannot cop out and give me multiple objectives - I too would like to maximize stockholder wealth, maximize customer satisfaction, maximize social welfare and employee benefits at the same time but it is just not doable. Second, your objective function has to be measurable. In other words, if you define your objective as maximizing the social good, how would you measure social good? Third, take your objective (and the measurement device you have developed) and ask yourself a cynical question: How might managers game this system for maximum benefit, while hurting you as an owner? In the long term, you may almost guarantee that this will happen.
No one has a monopoly on virtue. In the last few years, though, you have the ESG movement push for composite scores for companies, and that has created an eco system that I am cynical about, in terms of what will be ultimately accomplished. If you are interested in my perspective on ESG, please try these two posts that I have on the topic:
https://aswathdamodaran.blogspot.com/2020/09/sounding-good-or-doing-good-skeptical.html
https://aswathdamodaran.blogspot.com/2021/09/the-esg-movement-goodness-gravy-train.html
https://aswathdamodaran.blogspot.com/2022/03/esgs-russia-test-moment-to-shine-or.html
In addition, I did mention that the one thing that impact investing does not seem to measure itself on is actual impact, and here is the link:
https://aswathdamodaran.blogspot.com/2023/10/good-intentions-perverse-outcomes.html
Finally, to cement my standing as an amoral, unethical “cares only about money” standing, I wrote about the sacred cow that sustainability has become, and why it too may be heading for the slaughterhouse:
https://aswathdamodaran.blogspot.com/2024/11/the-siren-song-of-sustainability.html

Slides: ttps://nyu.box.com/s/zdu9wzdmn86fj2f0bu4z3htzooftqb0i
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session4atest.pdf
Post class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session4asoln.pdf

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Session 13: Dealing with Uncertainty and Equity Analysis

Sun, 28 Jun 2026 03:07:00 -0000

In this session, we looked at tools for dealing with uncertainty in investment analysis and how to assess an investment from an equity perspective. We also look at the process of valuing a target company in an acquisition.
Slides: http://www.stern.nyu.edu/~adamodara/pdfiles/cfovhds/Startofsession9.pdf
http://www.stern.nyu.edu/~adamodar/podcasts/cfspr15/cfsession13.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session13test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session13soln.pdf

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Session 4: DCF Big Picture and First Steps in Riskfree Rates

Sat, 27 Jun 2026 21:07:00 -0000

We started the class with a discussion of structuring a DCF and the different groupings of risk, and why some types of risk matter more than others, before moving on torisk free rates, exploring why risk free rates vary across currencies and what to do about really low or negative risk free rates. The blog post below captures my thoughts on negative risk free rates:
http://aswathdamodaran.blogspot.com/2016/03/negative-interest-rates-unreal.html
If you want to see my updated perspective on risk free rates, try my blog post from this year, built around the inflation question is here:
https://aswathdamodaran.blogspot.com/2025/01/data-update-4-for-2025-interest-rates.html
I know that the notion that the Fed sets interest rates runs deep, and that you will be able find ways of explaining away contrary evidence, if you feel strongly enough, but I would encourage you to keep an open mind on this question,. Way too much money and resources have been wasted because of the Fed obsession over the last decade to not fight back. Finally, I am included the latest sovereign ratings from Moody;’s and the sovereign CDS spreads .
Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/riskfree.pdf
Slides: https://nyu.box.com/s/4rxeeq1f2rytu1y9j98vq1h2choujmu6
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session4atest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session4asoln.pdf

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Session 12: Last loose ends, narrative + numbers and first valuation

Sat, 27 Jun 2026 15:07:00 -0000

In this session, we complete the discussion of loose ends (debt and employee options). We then looked at linking stories to numbers and closed off with our first valuation (of Con Ed).
Start of the class test:http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/dcfvaltestsMod.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession12.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/session12test.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/session12soln.pdf

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Session 5: Finishing up riskfree rates and moving on to risk premiums

Sat, 27 Jun 2026 09:07:00 -0000

We started the class by completing the last loose ends on risk free rates, before turning our attention to equity risk premiums and what they purport to measures. We looked at historical risk premiums and their limits and then extended the discussion to estimate equity risk premiums for countries without much historical data. If you want to look at the historical returns on stocks, bills, bonds, real estate and gold in the United States, you can get the historical data at:
https://pages.stern.nyu.edu/~adamodar/pc/datasets/histretSP.xlsx
We will come back talk about alternatives to historical risk premiums in the coming sessions. If you are interested in seeing what the equity risk premiums look like, by country, take a look at the spreadsheet at the link below:
https://pages.stern.nyu.edu/~adamodar/pc/datasets/ctryprem.xlsx
On the riskfree rate front, I have done many posts on why I think the Fed’s power to set interest rates is overrated. You may want to try these two:
https://aswathdamodaran.blogspot.com/2013/06/the-fed-and-interest-rates-lessons-from.html
https://aswathdamodaran.blogspot.com/2024/09/fed-up-with-fed-talk-central-banks.html

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/risktest.pdf
Slides: https://nyu.box.com/s/ks89xqizlae0hrk1edrev64yu0hk8ngg
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session5Atest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/sessio5Asoln.pdf

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Session 12: From earnings to time-weighted incremental cash flows

Sat, 27 Jun 2026 03:07:00 -0000

In this session, we move from earnings to time-weighted incremental cash flow returns on an investment (Rio Disney)
Slides: http://www.stern.nyu.edu/~adamodara/pdfiles/cfovhds/Startofsession9.pdf
http://www.stern.nyu.edu/~adamodar/podcasts/cfspr15/cfsession12.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session12test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session12soln.pdf

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Data Update 5 for 2025: It is a small world after all!

Fri, 26 Jun 2026 21:07:00 -0000

In this session, I take my version of the iconic Disney theme park ride (It's a small world after all) across the globe, starting with a look at how global equity markets did in 2024, in terms of price changes, and following up with an examination of currency movements during the year (with estimates of riskfree rates in each currency at the start of 2025). In the next section, I present my argument for why risk should vary across countries, and estimate equity risk premiums by country. In the final section, I look at how markets are pricing stocks in different parts of the world, with a preliminary assessment of which countries are trading at the lowest and highest multiples of earnings and sales.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate5for2025.pdf
Blog post: https://aswathdamodaran.blogspot.com/2025/02/data-update-5-for-2025-its-small-world.html
Datasets:
1. Equity risk premiums by country: https://pages.stern.nyu.edu/~adamodar/pc/datasets/currencyriskfree2025.xlsx
2. Riskfree rates by currency: https://pages.stern.nyu.edu/~adamodar/pc/datasets/ctryprem.xlsx

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In Practice Webcast #6: Debt and its Cost

Fri, 26 Jun 2026 15:07:00 -0000

In this webcast, I use Home Depot to illustrate the process of estimating the market value of debt and attaching a cost to that debt.
Home Depot 10K: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/Debt&Cost/HomeDepot10K.pdf
Home Depot 10Q: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/Debt&Cost/HomeDepot10Q.pdf
Debt spreadsheet: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/Debt&Cost/HDdebtcomputation.xls

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Data Update 6 for 2025: From Macro to Micro - The Hurdle Rate Question

Fri, 26 Jun 2026 09:07:00 -0000

Every business needs hurdle rates to decide whether to invest in a project, the right mix of debt and equity to use and how much cash can be taken out of the business (in dividends and buybacks), Every investor has to have a sense of hurdle rates, to decide whether to invest in stocks or businesses. In this session, I start by looking at the cost of capital (the most common avatar for a hurdle rate) and its many uses in finance, before examining the ingredients that go into estimating it for a company/investor. I use my (flawed) cost of capital calculations for global companies to examine how costs of capital vary across industries and market cap classes. I close with a discussion of key myths about the cost of capital, starting with the notion of a corporate hurdle rate and ending with the lie that the discount rate is the most critical part of a discounted cash flow valuation.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate6for2025.pdf
Blog post: https://aswathdamodaran.blogspot.com/2025/02/data-update-6-for-2025-from-macro-to.html
Data:
1. Cost of capital, by industry
a. US: https://pages.stern.nyu.edu/~adamodar/pc/datasets/wacc.xls
b. Global: https://pages.stern.nyu.edu/~adamodar/pc/datasets/waccGlobal.xls
c. Emerging Markets:
https://pages.stern.nyu.edu/~adamodar/pc/datasets/waccemerg.xls
d. Europe:
https://pages.stern.nyu.edu/~adamodar/pc/datasets/waccEurope.xls
e. Japan
https://pages.stern.nyu.edu/~adamodar/pc/datasets/waccJapan.xls
f. India
https://pages.stern.nyu.edu/~adamodar/pc/datasets/waccIndia.xls
g. China
https://pages.stern.nyu.edu/~adamodar/pc/datasets/waccChina.xls

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Session 11: Loose Ends in Valuation: Cash, Cross holdings and Other Assets

Fri, 26 Jun 2026 03:07:00 -0000

In this session, I look at the process of incorporating cash, cross holdings and other non-operating assets into the value of a business.
Start of the class test:http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/looseendsnew.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession11.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/session11test.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/session11soln.pdf

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Session 5: Closure on the end game and first steps on risk

Thu, 25 Jun 2026 21:07:00 -0000

We started the class by wrapping up the question of at the end game in business, and why I (and you don’t have have to) still trust markets, over managers and expert panels. Markets have no ego, and if allowed to play out, will devise corrections to almost every over reach in business, whether it be managers taking advantage of shareholders, borrowers ripping off lenders, companies lying to markets or creating large social costs. My view is that companies should run to maximize value, but that will involve accepts self-constraints on behavior, and even if the market does not recognize it right away, but that managers need to consider the messages in stock prices.
We then moved on to risk and some of you may be regretting the shift from the soft stuff , but trust me that it is still fun.. If it is not, keep telling yourself that it will become fun. Anyway, here are a few thoughts about today's class.
1. The Essence of Risk: There has been risk in investments as long as there have been investments. If you have the time, pick up a copy of Against the Gods by Peter Bernstein, John Wiley and Sons. It is a great book and an easy read. If you want more, you should also pick up a copy of Capital Ideas by Peter as well... That traces out the development of the CAPM....
More on Models: If you want to read more about the CAPM, you can begin with chapter 3 in my book. It provides an extended discussion of what we talked about in class today…. If you don’t have the book, not a big deal!
2. Diversifiable versus non-diversifiable risk: The best way to understand diversifiable and non-diversifiable risk is to take your company and consider all of the risks that it is exposed to and then categorize these risks into whether they are likely to affect just your company, your company and a few competitors, the entire sector or the overall market.
Slides: We started the class by wrapping up the question of at the end game in business, and why I (and you don’t have have to) still trust markets, over managers and expert panels. Markets have no ego, and if allowed to play out, will devise corrections to almost every over reach in business, whether it be managers taking advantage of shareholders, borrowers ripping off lenders, companies lying to markets or creating large social costs. My view is that companies should run to maximize value, but that will involve accepts self-constraints on behavior, and even if the market does not recognize it right away, but that managers need to consider the messages in stock prices.

Slides: https://nyu.box.com/s/wec06wsxfzeup1n9g1o82tl30h0qnfvb
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session5atest.pdf
Post class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session5asoln.pdf

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Session 11: Cost of Capital and First Steps on Returns

Thu, 25 Jun 2026 15:07:00 -0000

In this session, I look at how to compute the weights for cost of capital and begin the process of measuring investment returns.
Slides: http://www.stern.nyu.edu/~adamodara/pdfiles/cfovhds/Startofsession9.pdf
http://www.stern.nyu.edu/~adamodar/podcasts/cfspr15/cfsession11.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session11test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session11soln.pdf

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Session 5: Closure on Riskfree Rates and Equity Risk Premiums

Thu, 25 Jun 2026 09:07:00 -0000

n the session today, we started by doing a brief test on equity risk premiums. We then completed our discussion of risk free rates, and how the power of central banks comes from the perception that they have power, before embarking on an assessment of historical equity risk premiums, and why they are not good predictors of future equity risk premiums, before embarking on a discussion of country risk and how to deal with it, and measure it. If you are still confused about the different approaches to computing country risk premium, hang in there!
Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/risktest.pdf
Slides: https://nyu.box.com/s/x5y00f0vm8627z4ymrvepd9wymonbnlw
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session5atest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session5
asoln.pdf

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Session 10: Terminal Value

Thu, 25 Jun 2026 03:07:00 -0000

In this session, I suggest some rules that, if followed, will keep the terminal value in check in a DCF.
Start of the class test:http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/termvalue.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession10.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/session10test.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/session10soln.pdf

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Session 6: Implied Equity Risk Premiums

Wed, 24 Jun 2026 21:07:00 -0000

In this session, we started by doing a brief test on the relationship between prices and risk premiums. We spent the rest of the class about the dynamics of implied equity risk premiums and what makes them go up, down or stay unchanged. We then moved to cross market comparisons, first by comparing the ERP to bond default spreads, then bringing in real estate risk premiums and then extending the concept to comparing ERPs across countries. Finally, I made the argument that you should not stray too far from the current implied premium, when valuing individual companies, because doing so will make your end valuation a function of what you think about the market and the company. If you have strong views on the market being over valued or under valued, it is best to separate it from your company valuation. I am attaching the excel spreadsheet that I used to compute the implied ERP at the start of February 2025. Play with it when you get a chance.

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/ImplPremNew.pdf.pdf
Slides: https://nyu.box.com/s/ks89xqizlae0hrk1edrev64yu0hk8ngg
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session6Atest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/sessio6Asoln.pdf

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Session 10: Debt and its cost

Wed, 24 Jun 2026 15:07:00 -0000

After the quiz in the first 30 minutes, we turned our attention to debt (and what should be in it) and its cost.
Slides: http://www.stern.nyu.edu/~adamodara/pdfiles/cfovhds/Startofsession9.pdf
http://www.stern.nyu.edu/~adamodar/podcasts/cfspr15/cfsession10.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session10test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session10soln.pdf

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Data Update 7 for 2025: The End Game in Business

Wed, 24 Jun 2026 09:07:00 -0000

The end game in business, sustainability and ESG distractions aside, is to generate profits and create value. In this session, I look at profitability, by first breaking down an income statements, and using the many measure of profits there to get a handle on business economics - gross margin for unit economics, operating margins for economies of scale and EBITDA margins for capital intensity. After looking at the profit margins for businesses around the world, broken down by sector/industry and region, I scale profits to invested capital to get accounting measures of return on equity and capital. These returns, when compared to costs of equity and capital, become a (noisy) shorthand for value creation, and the data in 2024 suggests that value creation is difficult, with 70% of companies earning less than the cost of capital.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate7for2025.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2025/02/data-update-7-for-2025-end-game-in.html
Data links:
Margin data (US): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html
Excess return data (US): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/EVA.html
For other markets go to my webpage, and look under current data.

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Review Session for Quiz 1

Wed, 24 Jun 2026 03:07:00 -0000

Review for Quiz 1

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Session 6: Riskfree Rates and Equity Risk Premiums

Tue, 23 Jun 2026 21:07:00 -0000

We started today’s class by tying up the last loose ends with risk and return models, talking about how assuming that there are no transactions costs and private information can lead us all to hold the market portfolio, and how risk can be then measured as risk added to that portfolio. We did damn the CAPM with faint praise, arguing that it does not do very well at explaining differences in returns across companies, but that it does at least as well as the alternatives. We then started on the mechanics of the model, taking about risk free rates: how to estimate the risk free rate in a currency where there is no default free entity issuing bonds in that currency and why risk free rates vary across currencies. The key lesson is that much as we would like to believe that riskfree rates are set by banks, they come from fundamentals - growth and inflation. I have a post on risk free rates that you might find of use:
http://aswathdamodaran.blogspot.com/2015/04/dealing-with-low-interest-rates.html
In fact, risk free rates turned negative in a few currencies, upending what we know about risk free rates in. Here is my post on negative risk free rates.
http://aswathdamodaran.blogspot.com/2016/03/negative-interest-rates-unreal.html
We ended the class by beginning the discussion of equity risk premiums, but more on that in the next class.

Slides: https://nyu.box.com/s/58uimw8wz7h7ac8rcfkz4ltv2szb758i
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session6atest.pdf
Post class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session6asoln.pdf

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Quiz 1: Review Session

Tue, 23 Jun 2026 15:07:00 -0000

This is a review session for the first quiz. You can download the slides that go with it at the link below:
Slides: http://www.stern.nyu.edu/~adamodar/pptfiles/acf3E/reviewQuiz1.ppt

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Session 6: Company Exposure to Country Risk + Implied Equity Risk Premiums

Tue, 23 Jun 2026 09:07:00 -0000

In today’s class, we started by looking how to measure a company's equity risk premium, arguing that it should be based on where the company operates, rather than where it is incorporated. We then moved not to implied equity risk premiums, why they move over time and how they are related to the prices of risk in other risky asset classes (bond and real estate).
Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/ImplPremNew.pdf
Slides: https://nyu.box.com/s/aro2ikxtmr3u479ro1dc80t1hx772qt2
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session6Atest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session6
Asoln.pdf

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In-Practice Webcast #5: Estimating a bottom up beta

Tue, 23 Jun 2026 03:07:00 -0000

In this session, I look at how to estimate the beta for a company from its business mix and financial leverage.

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Session 7: Betas, relative risk and first steps on cost of debt

Mon, 22 Jun 2026 21:07:00 -0000

In this session, we started by reviewing the pitfalls of regression betas. They are backward-looking, noisy and subject to game playing. We went on to talk about bottom up betas, focusing on defining comparable firms and expanding the sample. I did make a big deal about bottom up betas, but may have still not convinced you or left you hazy about some of the details. If so, I thought it might be simpler to just send you a document that I put together on the top ten questions that you may have or get asked about bottom up betas. I think it covers pretty much all of the mechanics of the estimation process, but I am sure that I have missed a few things.
http://www.stern.nyu.edu/~adamodar/New_Home_Page/TenQs/TenQsBottomupBetas.htm
We also initiated the discussion of the cost of debt, defining it to be the rate at which companies can borrow long term, today and in the next session, we will complete our discussion of cost of capital.

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/beta.pdf
Slides: https://nyu.box.com/s/c63pedeivbwqinsbkg3ets9cs3d8ivvf
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session7Atest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/sessio7Asoln.pdf

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Session 9: Fundamental Growth

Mon, 22 Jun 2026 15:07:00 -0000

In this session, I look at how to estimate growth from fundamentals and how reinvestment and return on investment drive growth in the long term.
Quiz in the first 30 minutes of class
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession9.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/session9test.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/session9soln.pdf

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ROE, Returns to Shareholders, Good/Bad Companies and Efficient Markets: Back to Basics

Mon, 22 Jun 2026 09:07:00 -0000

My session on profitability in companies around the world, and the measurement of excess returns as the difference between return on equity (capital) and cost of equity (capital) gave rise to comments that suggest to me that there is confusion about what accounting returns mean and what exactly makes for an efficient market. In this session, I use a very simple example of two businesses, one in a good business and the other in a bad one, that I use to explain the contract between accounting returns and returns to shareholders in markets, between book value and market value and between good and bad companies. I apologize if you find it simplistic, but sometime keeping it simple is the basis for the best insights.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/ROESimple.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2025/02/return-on-equity-earnings-yield-and.html

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Session 9: Estimating bottom up betas for companies

Mon, 22 Jun 2026 03:07:00 -0000

In this session, I go through the process of estimating bottom up betas for Disney, Vale, Tata Motors, Baidu, Deutsche Bank and a private business.
Slides: http://www.stern.nyu.edu/~adamodara/pdfiles/cfovhds/Startofsession9.pdf
http://www.stern.nyu.edu/~adamodar/podcasts/cfspr15/cfsession9.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session9test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session9soln.pdf

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Session 8: Cost of capital closure + First steps on cash flows

Sun, 21 Jun 2026 21:07:00 -0000

In this session, we started with the cost of debt and computing debt ratios for companies and how to deal with hybrid securities.. If you are interested in getting updated default spreads (on the cheap or free), try the Federal Reserve site in St. Louis:
https://fred.stlouisfed.org
These are spreads on indices created by rating, updated daily. Neat, right? For an even more detailed albeit less user-friendly space, try the NAIC and once you are on the site, go to search and type in F&G current spreads. The most updated version I found looks like this:
They update every month, though it takes them about six weeks after the month ends to do this. We then moved on to earnings and cash flow’s and after a introduction to cash flows, I promised you a link to the post on Microsoft where I talk about the differences in free cash flows:
https://aswathdamodaran.blogspot.com/2022/10/earnings-and-cash-flows-primer-on-free.html
We ended the class by noting that leases are debt, and while accountants should always treated them as such, they came to their senses in 2019.
Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/cftests.pdf
Slides: https://nyu.box.com/s/qo273a8v2wr42c60pd839g116bohh1iv
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session8Btest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session8Bsoln.pdf

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Session 8: More on cash flows and first steps on growth

Sun, 21 Jun 2026 15:07:00 -0000

In this session, I first look at dealing with money-losing companies and then move on to estimating reinvestment and cash flows to equity. I close the session by starting the discussion of growth rates by examining historical growth and analyst forecasts.
Start of the class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/growthrateMod.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession8.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/session8test.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/session8soln.pdf

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Session 7: Equity Risk Premiums and Betas

Sun, 21 Jun 2026 09:07:00 -0000

This class was spent talking mostly about equity risk premiums. The key theme to take away is that equity risk premiums don't come from models or history but from our guts. When we (as investors) feel scared or hopeful about everything that is going on around us, the equity risk premium is the receptacle for those fears and hopes. Thus, a good measure of equity risk premium should be dynamic and forward looking. We looked at three different ways of estimating the equity risk premium. It is with this objective in mind that we computed an implied equity risk premium for the S&P 500, using the level of the index. If you want to try your hand at it, here is my February 2025 update:
http://www.stern.nyu.edu/~adamodar/pc/implprem/ERPFeb25.xlsx
Play with the spreadsheet. In fact, try it with today’s index level and T.Bond rate and see what the ERP is right now. I also noted the path of historical implied equity risk premiums, and how they have become more unstable and higher since 2008, mentioning a greater fear of catastrophic risks than ever before. If you are interested in this topic, I wrote a piece about it last week:
https://aswathdamodaran.blogspot.com/2024/02/catastrophic-risk-investing-and.html
I then extended this approach into other markets, and talked about how to (and tried to) estimate equity risk premiums for other markets, using the country ratings (default spreads) as a building block. You can get my 2024 start-of-the-year equity risk premiums at this link:
https://pages.stern.nyu.edu/~adamodar/pc/datasets/ctryprem.xlsx
As a final step, see if you can find the geographic revenue distribution for your company. You can then use my latest ERP update to get the ERP for your company. If you can find production exposure, even better. You will then have to decide whether you want ERPs based upon production, revenues or a composite of the two.

Slides: https://nyu.box.com/s/9ll1t8lwtj6hm9ws1y36pa94qf4sjwrr
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session7atest.pdf
Post class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session7asoln.pdf

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Session 8: Determinants of Betas

Sun, 21 Jun 2026 03:07:00 -0000

In this session, I look past the regression at the fundamental determinants of betas - the business choices you make and the financial leverage you take on.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr15/cfsession8.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session8test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session8soln.pdf

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Session 7: Measuring Relative Risk - Betas and Alternatives

Sat, 20 Jun 2026 21:07:00 -0000

In this session, we discussed how to measure the relative risk of a company, starting with betas (regression versus bottom up) but also examining alternative measures of relative risk, some based on prices and some on accounting earnings. In short, the end game is coming up with a risk-adjusted cost of equity (discount rate), and the process is open to alternatives to what you may see as flawed measures of risk.

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/cftests.pdf
Slides: https://nyu.box.com/s/2p0zkb6krm1htxkjmwqz991lkxo3bvxr
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session7Atest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session7Asoln.pdf

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Session 7: Earnings and Cash flows -I

Sat, 20 Jun 2026 15:07:00 -0000

In this session, we look at the adjustments that have to be made to earnings to generate a "good" base year earnings number.
Start of the class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/cftests.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession7.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/session7test.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/session7soln.pdf

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Session 9: Tax rates, Cap Ex and Working Capital

Sat, 20 Jun 2026 09:07:00 -0000

In this session, we began by continued with our discussion of why we capitalize lease commitments and R&D expenses, and how they affect valuation inputs. We continued our discussion of cash flows, by first putting to rest some final issues on earnings, including the tax rate to use in computing after-tax cash flows and dealing with money losing companies. In the process, we did look at what to do about accounting fraud, and while the answer is not much, there may be a role for forensic accounting. To be honest, most forensic accounting books are designed for valuation morticians, but here are a couple that you may find useful:
http://www.amazon.com/Financial-Shenanigans-Accounting-Gimmicks-Reports/dp/0071703071/ref=pd_sim_b_8
http://www.amazon.com/Creative-Cash-Flow-Reporting-Sustainable/dp/0471469181/ref=pd_sim_b_2
Finally, if you want to take apart a company’s financial statements, looking for clues on profitability, you might find my most recent data update post useful:
https://aswathdamodaran.blogspot.com/2025/02/data-update-7-for-2025-end-game-in.html

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/cftests2.pdf
Slides: https://nyu.box.com/s/3nwim0nfnm9uuuvsl1lzzqifr06sd9or
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session9Btest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session9Bsoln.pdf

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Data Update 8 for 2025: The Draw and Drawbacks of Debt

Fri, 19 Jun 2026 21:07:00 -0000

In this session, I start with an assessment of the debt versus equity tradeoff, looking at fictional, real and frictional reasons for the use of debt. I then look at the debt at global companies in 2024, examining differences between sectors and regions. Looking for reasons why, I turn to corporate tax rates around the world (which increase tax benefits to borrowing) and default risk (which make it less attractive), and review how US companies reacted to the 2017 change in marginal tax rates. I finally turn to debt design, again starting with first principles, before chronicling the make up of debt (interest-bearing vs leases, fixed vs floating, and bonds vs bank loans) across the world. In sum, companies have weathered the higher interest rates that 2022 brought them, but the true test will come during a global slowdown or recession.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate8for2025.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2025/02/data-update-8-for-2025-debt-taxes-and.html
Data:
1. Debt details, by industry:
US: https://pages.stern.nyu.edu/~adamodar/pc/datasets/debtdetails.xls
Global: https://pages.stern.nyu.edu/~adamodar/pc/datasets/debtdetailsGlobal.xls
2. Debt fundamentals, by industry:
US: https://pages.stern.nyu.edu/~adamodar/pc/datasets/dbtfund.xls
Global: https://pages.stern.nyu.edu/~adamodar/pc/datasets/dbtfundGlobal.xls

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In Practice Webcast #4: Reading a Regression Beta Page

Fri, 19 Jun 2026 15:07:00 -0000

In this webcast, I look at the information that can be extracted from a regression of returns on the stock against returns on an index.
Regression Beta Page: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/Regression/Disneyregression.pdf
Spreadsheet: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/Regression/Disneyriskchecker.xls
Excel Regression Page: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/Regression/DisneyregressionExcel.xls
Disney Annual Report (2012): http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/Regression/DisneyAnnualReport2012.pdf

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Session 8: Expected returns and Costs of Equity

Fri, 19 Jun 2026 09:07:00 -0000

In this class, we looked past regression betas at how the choices companies make about the businesses they enter can determine their betas.. Summarizing the class, here is what we listed as the three determinants of betas:
1. Betas are determined in large part by the nature of your business. While I am not an expert on strategy, marketing or productions, decisions that you make in those disciplines can affect your beta. Thus, your decision to go for a price leader as opposed to a cost leader (I hope I am getting my erminology right) or build up a brand name has implications for your beta. As some of you probably realized today, the discussion about whether your product or service is discretionary is tied to the elasticity of its demand (an Econ 101 concept that turns out to have value)... Products and services with elastic demand should have higher betas than products with inelastic demand. And if you do get a chance, try to make that walk down Fifth Avenue...
2. Your cost structure matters. The more fixed costs you have as a firm, the more sensitive your operating income becomes to changes in your revenues.
3. Financial leverage: When you borrow money, you create a fixed cost (interest expenses) that makes your equity earnings more volatile. Thus, the equity beta in a safe business can be outlandishly high if has lots of debt. The levered beta equation we went through is a staple for this class and we will revisit it again and again. So, start getting comfortable with it.

If you remember, we looked at the beta for Disney after its acquisition of Cap Cities in the class. The first step was assessing the beta for Disney after the merger. That value is obtained by taking a weighted average of the unlevered betas of the two firms using firm values (not equity) as the weights. The resulting number was 1.026. The second step is looking at how the acquisition is funded. We looked at an all equity and a $10 billion debt issue in class and I left you with the question of what would happen if the acquisition were entirely funded with debt. (If you have not tried it yet, you should perhaps hold off on reading the rest of this email right now)
Debt after the merger = 615+3186 + 18500 = $22,301 million ( Disney has to borrow $18.5 billion to buy Cap Cities Equity and it assumes the debt that Cap Cities used to have before the acquisition)
Equity after the merger = $31,100 (Disney's equity does not change)
D/E Ratio = 22,301/31,100= 0.7171
Levered beta = 1.026 (1+ (1-.36) (0.7171)) = 1.497
Note that I used a marginal tax rate of 36% for both companies, which was the case in 1996.

Slides: https://nyu.box.com/s/nfah5jjpih77ma50itxab18px2kvap45
https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session8test.pdf
Post class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session8soln.pdf

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Session 6: Measuring Beta, cost of debt and capital

Fri, 19 Jun 2026 03:07:00 -0000

In this session, I look at bottom up betas and how best to measure them. I also look at the process of estimating costs of debt & capital.
Start of the class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/beta&wacc.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession6.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/session6test.pdf
Post class test solution:
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/session6soln.pdf

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Session 8: Closure on Cost of Capital + First steps on cash flows

Thu, 18 Jun 2026 21:07:00 -0000

In this session, we completed our discussion of the cost of capital, by talking about the ingredients that go into the cost of debt and the weights to use on debt and equity in capital. We then took a big picture perspective of free cash flows, before beginning on earnings, starting with an examination of how best to update earnings and correct them for the mistreatment of some financial expenses as operating expenses (leases were the biggest, but accounting has come to its senses) and R&D (yet to come, for next class).
Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/DebtCost.pdf
Slides: https://nyu.box.com/s/78d95svdz3v0rbkvm2457sxdex2j1viw
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session8Btest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session8Bsoln.pdf

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Session 6: Equity Risk Premiums

Thu, 18 Jun 2026 15:07:00 -0000

In this session, I look at the process of estimating equity risk premiums for countries and then extend that discussion to estimating it for a company.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr15/cfsession6.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session6test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session6soln.pdf

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Session 10: FCFE Closure and First Steps on Growth

Thu, 18 Jun 2026 09:07:00 -0000

In this session, we started by completing our discussion of FCFE and how it varies over a corporate life cycle, and then looked at three approaches to estimating growth - a historical growth rate, where you look at past growth, outsourcing growth to analysts or managers and sustainable growth, where you tie growth to how much a company is reinvesting and how well it is reinvesting. Ultimately, you have to find the right mix of historical data, industry trends and your assessment of the company in forecasting growth, and letting uncertainty stop you is not an option.

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/growthrate.pdf
Slides: https://nyu.box.com/s/xvqahjcl2sucq9g9qs65fnqg04s8soz1
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session10Btest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session10Bsoln.pdf

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Session 5: Implied Equity Risk Premiums (Fixed with slides)

Thu, 18 Jun 2026 03:07:00 -0000

In this session, I look at the intuition behind implied equity risk premiums and how to get from a country ERP to a company ERP.
Start of the class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/ERPtest.xls
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession5.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session5test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session5soln.pdf

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Session 9: More on beta - bottom up betas and private company betas

Wed, 17 Jun 2026 21:07:00 -0000

In this session, we continued the discussion of betas being weighted averages, and used the concept to estimate the beta for Disney, starting with its businesses and working up to the beta of the company, and we repeated that process with the other companies in our mix - Vale, Tata Motors, Baidu and Deutsche Bank. We ended the class by talking about how to estimate the cost of equity, when an investor/buyer is not diversified, and noted that this can explain why private companies end up as parts of publicly traded companies.
Slides: https://nyu.box.com/s/d2s60tjtpvonbpbeknbbwvim52sk3q27
https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session9test.pdf
Post class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session9soln.pdf

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Valuation Tools Webcast: Reading a 10K

Wed, 17 Jun 2026 15:07:00 -0000

Financial statements are increasingly filled with fluff and knowing how to separate what matters from what does not is critical. In this webcast, I look at the P&G 10K, with the intent of extracting the information that matters.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/PG/Reading10KPG.pdf
P&G 10K: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/PG/ProcterGamble10K.pdf
P&G Spreadsheet: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/PG/P&Gvaluationfixed.xls

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Session 5: Risk and Return Models

Wed, 17 Jun 2026 03:07:00 -0000

In this session, we did an overview of how we think about and measure risk in finance, the characteristics of a good risk & return model and whether the ones that are in use measure up. In the second part of the session, we looked at how best to estimate risk free rates.

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Session 11: Closure on Growth and First Steps on Terminal Value

Tue, 16 Jun 2026 21:07:00 -0000

In this session, we continued with our discussion of sustainable growth, by looking at growth in net income and operating income, using versions of the reinvestment rate and accounting returns for each. We then moved on to building cash flows in a general case, starting with revenue growth, moving on to operating margins and reinvestment, with a sales to capital ratio. With each, we looked the determinants, with Airbnb as an illustrative example. In the final part of the class, we started the discussion of terminal value, by noting that using a terminal multiple undercuts an intrinsic value by making it a forward pricing.

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/growthrate2.pdf
Slides: https://nyu.box.com/s/nm0kn1renf0enlndo8dhe399e6u6xvsw
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session11Ctest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session11Csoln.pdf

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Session 5: Implied Equity Risk Premiums and First steps on relative risk measures

Tue, 16 Jun 2026 15:07:00 -0000

In this session, we looked at the mechanics and intuition behind implied equity risk premiums and how they have varied over time as a function of other macro variables. We took our first steps in assessing the relative risk in a company.
Start of class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/ERPtest.xls
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession5.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session5test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session5soln.pdf

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Session 10: Debt and the Cost of Debt

Tue, 16 Jun 2026 09:07:00 -0000

In the quiz -shortened session, we first defined debt broadly as including all contractual obligations, thus encompassing all interest bearing debt and leases. We then argued that the cost of deb tis a long term rate of borrowing money today, and is thus composed of a riskfree rate and a default spread. With rated companies, we can use the rating to get a spread, but for non-rated companies, you have to use the interest coverage ratio to get a synthetic rating, and then use that rating to get a default spread. With companies in risky countries, you should be adding the country default spreads to the riskfree rates to get to the cost of debt. Finally, we have to bring in the tax savings that accrue from being able to net interest expenses out to get to taxable income, by multiplying the cost of debt by (1- marginal tax rate).
Slides: https://nyu.box.com/s/07kdb11ksh4sqeisws13yqsndflxi17g
https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session10test.pdf
Post class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session10soln.pdf

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In-Practice Webcast #2: Analyzing the stockholder base

Tue, 16 Jun 2026 03:07:00 -0000

In this session, we look at the top stockholders in a company, with the intent of finding potential conflicts of interest that may affect us as individual stockholders

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Session 10: Estimating Growth

Mon, 15 Jun 2026 21:07:00 -0000

In this quiz-shortened session, we started our discussion of growth rates by first looking at historical growth rates, and how they vary across metrics (revenues, operating income, net income etc.) and why arithmetic and geometric averages can be very different. I also mentioned I.M.D. Little and his thesis title, “Higgledy Piggledy Growth”, which he managed to publish in a journal:
https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1468-0084.1962.mp24004001.x
We then looked at why equity research promises so much and delivers so little, and in that context, I thought you might find it interesting to see the analysts who showed on the Institutional Investors’ All America Team last year:
https://www.institutionalinvestor.com/article/2ccm1e0hpe37pla4uuh34/research/the-new-stars-of-the-52nd-annual-all-america-research-team
We ended with a discussion of fundamental growth rates, starting with earnings per share, and then moving on to non-cash net income. While we Weill continue with that discussion next class, the basic theme will remain the same, which is that sustainable or long term growth is the product of how much you reinvest and how well you reinvest, a lesson worth returning to over and over again.
Quiz at the start of the class for first 30 minutes.
Slides: https://nyu.box.com/s/xe955dmsa7rcjfkq081c15p6s13fkzeh
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session10test.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session10soln.pdf

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Session 12: The Terminal Value

Mon, 15 Jun 2026 09:07:00 -0000

In this quiz-shortened session, we looked at the elephant in the DCF room, the terminal value, and laid out broad constraints that keep it in check. In particular, we looked at why the riskfree rate is a proxy for nominal growth in the economy, why you should not wait too long to put your company into stable growth, and why it is not growth, but steady-state return on capital is what determines terminal value. We closed the class by looking at the choices you face in building valuation models, and how you make them.
Slides: https://nyu.box.com/s/ua9xkqyud18dj6yuciidistbbeuwdi41
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session12Btest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session12Bsoln.pdf

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Session 4: Equity Risk Premiums - Historical and Country

Mon, 15 Jun 2026 03:07:00 -0000

In this session, we completed the discussion of risk free rates and started on the estimation of equity risk premiums, both for mature and emerging markets.
Start of class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/risktests.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession4.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session4test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session4soln.pdf

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Data Update 9 for 2025: Dividends and Buybacks - Inertia and Me-tooism!

Sun, 14 Jun 2026 21:07:00 -0000

In this session, I start by looking at a structure of cash return that is built on the notion that equity investors in businesses should get the cash left over after every other need has been met, i.e., residual cash flows, and examine how to estimate potential dividends. I then look at practice and at why companies end up deviating from the residual cash flow model, and in particular, at the choice between dividends and buybacks to return cash to shareholders. In the second half of the session, I look at cash returned in 2024, across sectors and geographies, broken down into dividends and buybacks, and then highlight companies with dividend policies that are mismatched with their cash flows, and why that mismatch exists.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate9for2025.pdf
Blog post: https://aswathdamodaran.blogspot.com/2025/03/data-update-9-for-2025-dividends-and.html
Datasets:
Dividend fundamentals
US: https://pages.stern.nyu.edu/~adamodar/pc/datasets/divfund.xls
Global: https://pages.stern.nyu.edu/~adamodar/pc/datasets/divfundGlobal.xls
Cash return and FCFE
US: https://pages.stern.nyu.edu/~adamodar/pc/datasets/divfcfe.xls
Global: https://pages.stern.nyu.edu/~adamodar/pc/datasets/divfcfeGlobal.xls

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Session 3: DCF Basics and the Risk free rate

Sun, 14 Jun 2026 15:07:00 -0000

(Technical difficulties make the audio very difficult to hear. I am sorry!)
In this session, we laid the foundations for DCF valuation and looked at how best to estimate the risk free rate for a valuation.
Start of class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/kennecott.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession3.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session3test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session3soln.pdf

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Session 11: Hurdle Rates Closure and First Steps on Investment Returns

Sun, 14 Jun 2026 09:07:00 -0000

In this session, we first completed our discussion of hurdle rates, by looking at computing market values of debt (drawing on bond pricing), and then talking about when you use the cost of equity and when the cost of capital as a hurdle rate. Our discussion of investment returns began with the “Show me the money” theme from Jerry Maguire, and why we use cash flows, not earnings, in measuring investment returns, After making an argument for the primacy of cash flows, we looked at how a good measure of return is time weighted and incremental and how every investment is a project (small or large). We spent the bulk of the class describing the Rio Disney investment, and then computing the return on capital on that investment, based upon expected revenues and operating income.
Slides: https://nyu.box.com/s/v8w3inwa8eif4y94lvey3grylt3bofvc
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session11test.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session11soln.pdf

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Session 11: More on Growth and Terminal Value

Sat, 13 Jun 2026 21:07:00 -0000

In this class, we spent some time on the key value drivers - revenue growth, operating margins and sales to capital, before tying up loose ends on terminal value, with the dangers of waiting too long to put your company into stable growth and the importance of long term excess returns in determining terminal value. In the last part of the class, we looked at building a DCF model, and how your choices of which cash flows to discount, the discount rate to use and the growth rates/patterns for a business have to be tailored to the firms.
Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/termvalue.pdf
Slides: https://nyu.box.com/s/0a7ak39hdejyp5vq0x58l55dsir0cwnx
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session11Atest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session11Asoln.pdf

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In Practice Webcast #1: Corporate Governance

Sat, 13 Jun 2026 15:07:00 -0000

I use HP as an example and look at how to make judgments on the quality of corporate governance, based upon public filings.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/corpgovHP/corpgov.pdf
HP Annual Report: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/corpgovHP/HPAnnual.pdf
HP 14 DEF: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/corpgovHP/HPDEF14A.pdf

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Session 13: Loose Ends in Valuation

Sat, 13 Jun 2026 09:07:00 -0000

In this class, we started with a look at customizing discounted cash flows models to reflect the companies that we are valuing, talking about equity versus firm valuation and choice of growth patterns We then moved on to a discussion of cash holdings and why investors may discount that cash in the hands of some companies, to cross holdings, and why they are difficult to incorporate into value, and to other assets that you may consider adding on, because we have not considering them yet. On the latter, the key component to remember is not to double count an asset, by first counting its cash flow and then the value of the asset itself. Finally, I attach a weekly challenge for this week, built around terminal value. Please try it when you get a chance. It is simple but it will reinforce some key components of what we did in class.
Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/looseendsnew.pdf
Slides: https://nyu.box.com/s/hzczx1j4s66cen6ud4kawbhfvve7y5pz
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session13Ctest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session13Csoln.pdf

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Session 2: Valuation Approaches

Sat, 13 Jun 2026 03:07:00 -0000

In this session, we look at the different approaches to valuation, what they assume about how markets work (and don't work) and why you may choose one over the other.
Start of class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/biastests.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valspr15/valsession2.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session2test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session2soln.pdf

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Session 12: Incremental, time-weighted Cash Flow Returns

Fri, 12 Jun 2026 21:07:00 -0000

We started this session with a discussion of the right hurdle rate for the Rio Disney theme part, and argued for using the cost of capital for theme parks, adjusted for country risk. We then moved on to looking at accounting returns both for the project and at the company-level as a measure (crude, but still useful) of whether a company is earning more or less than its cost of capital, Returning to the project, we looked at the adjustments that need to be made to get from earnings to cash flows (depreciation, cap ex and working capital) and from cash flows to incremental cash flows (sunk costs, allocated expenses) and then to time-weighted incremental cashflows (discounting and time value). We concluded that the Rio Disney project is a good one, both in terms of NPV and IRR, We ended the class by examining why switching the currency to Brazilian reals has no effect on NPV, since both the discount rate and the expected cash flows are changed by the expected inflation differential.
Slides: https://nyu.box.com/s/p5p1jrfi5brzfn3oeek9xcfckq6wzy81
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session12test.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session12soln.pdf

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Session 2: Corporate Governance - The Board of Directors

Fri, 12 Jun 2026 15:07:00 -0000

In this session, we begin by looking at the objective in corporate finance (maximize firm value) and why it gets narrowed to maximizing stock price. We then start our discussion of corporate governance.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr15/cfsession2.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session2test.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session2soln.pdf

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Session 12: Loose Ends in Valuation

Fri, 12 Jun 2026 09:07:00 -0000

During this session we finished started on the loose ends in valuation, with cash and cross holdings first, and then moving on to other assets. The simple rule to follow is to make sure that you neither double count nor entirely miss assets owned by a firm. We then moved on to look how complexity plays out in valuation, before ending with questions of what to include in debt, with different rules on debt in your cost of capital calculation and debt that you net out from firm value to get to equity value. To put a bow on this part of the class, I have a blog post that you may find enjoyable about dysfunctional DCFs.
http://aswathdamodaran.blogspot.com/2015/02/dcf-myth-1-if-you-have-ddiscount-rate.html

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/looseendsnew.pdf
Slides: https://nyu.box.com/s/9elycygqbjowh3cprrcts0zah07c2ggb
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session12atest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session12asoln.pdf

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Session 1: Introduction to class

Fri, 12 Jun 2026 03:07:00 -0000

Describes the class, its objectives and structure. You can get the slide packets and other material by going to:
http://www.stern.nyu.edu/~adamodar/New_Home_Page/webcastcfspr15.htm
Slides: (1) http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/eqsyllspr15.pdf (2) http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/eqproj.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session1test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session1soln.pdf

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Session 14: Last Loose Ends + First Steps on Storytelling

Thu, 11 Jun 2026 21:07:00 -0000

During today's session we finished the last loose ends in valuation and started on connecting stories to numbers. The way in which companies and equity research analysts treat stock based compensation is criminally negligent and I hope that you found this session useful in clarifying your thinking on the topic. We then started on how story telling is at the heart of valuation, and a five step process for connecting stories to numbers. If you want a longer version of my stories to numbers session, you may prefer this Google talk version that I did a few years ago on the same topic:
https://www.youtube.com/watch?v=uH-ffKIgb38
It is longer and in a little more detail. To put a bow on this part of the class, I have a blog post that you may find enjoyable about dysfunctional DCFs.
http://aswathdamodaran.blogspot.com/2015/02/dcf-myth-1-if-you-have-ddiscount-rate.html

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/looseends2.pdf
Slides: https://nyu.box.com/s/c3o3mv58tiihfub88ejw7z9rosryrt54
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session14aXtest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session14aXsoln.pdf

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Session 1: Setting the table

Thu, 11 Jun 2026 15:07:00 -0000

Lays out the structure of the class and the big picture of corporate finance, along with some central themes.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/cfsyllspr15.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session1test.pdf
Post class test solution:
http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session1soln.pdf

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Session 13: Dealing with uncertainty and more project analyses

Thu, 11 Jun 2026 09:07:00 -0000

I started this class by talking about ways of dealing with uncertainty, ranging from payback to simulations. I also mentioned Edward Tufte’s book on the visual display of information, and you can find it at this link:
https://www.amazon.com/Visual-Display-Quantitative-Information/dp/0961392142/ref=sr_1_1?hvadid=241656058541&hvdev=c&hvlocphy=9067609&hvnetw=g&hvqmt=e&hvrand=11533164312248058396&hvtargid=kwd-909679892&hydadcr=3235_10393094&keywords=the+visual+display+of+quantitative&qid=1679504391&sr=8-1
If, like me, you find yourself fascinated by simulations, but your statistics is a little rusty, you can try this paper I have on statistical distributions.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3237778
You don’t have to read the whole paper, just the appendix. I have attached the post class test for today, with the solution. In the final part of the class, we looked at tiat extensions of investment analysis for an investment show for Disney Plus, an iron ore mine for Vale and an acquisitions. The principle of matching cash flows to discount rates cut through all the examples, but the Vale iron ore mine looks at how cash flows vary when looked at through equity investor eyes. I hope that you get a chance to work on the case this weekend, and while I will be on the road in Greece, I will check my emails for any questions that you may have.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/classslidesMar12/cfsession13slides.pdf
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session13test.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session13soln.pdf

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Valuation Tools Webcast #14: Valuing Equity as an Option

Thu, 11 Jun 2026 03:07:00 -0000

In this webcast, I look at using option pricing techniques to value equity in a deeply distressed company (losing money, with a lot of debt).

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Session 13: Stock-based Compensation and Stories in Valuation

Wed, 10 Jun 2026 21:07:00 -0000

In today’s class, we started by looking at stock-based compensation, and why it is an expense that should be treated as one, notwithstanding arguments about it being non-cash. We then started on story telling in valuation, and the process, using Uber in June 2014 as an example. If you want a longer version of my stories to numbers session, you may prefer this Google talk version that I did a few years ago on the same topic:
https://www.youtube.com/watch?v=uH-ffKIgb38
It is longer and in a little more detail.

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/storytest.pdf
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/classslidesMar12/valsession13slides
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session13atest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session13asoln.pdf

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Valuation Tools Webcast #13: The Option to Delay (Valuing Patents)

Wed, 10 Jun 2026 15:07:00 -0000

In this webcast, I look at applying option pricing models to value the option to delay and how that can be extended to value patents.

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Session 15: More story telling and first company valuations

Wed, 10 Jun 2026 09:07:00 -0000

In this class, we continued our discussion of stories, and how critical it is to keep the feedback loop open, so that you can make your stories better. I also talked about runaway stories and the big market delusion, and if you are interested, here are my posts on the topics:
Runaway stories: https://aswathdamodaran.blogspot.com/2015/11/runaway-stories-and-fairy-tale-endings.html
Big Market Delusions: https://aswathdamodaran.blogspot.com/2019/12/the-market-is-huge-revisiting-big.html
We also talked about how story breaks, shifts and changes. Since I talked about dealing with new earnings reports, I thought you may find these two posts of interest in how narratives shift, and with them, values:
Reacting to Earnings Reports: http://aswathdamodaran.blogspot.com/2014/08/reacting-to-earnings-reports-lets-get.html
Narrative Resets: http://aswathdamodaran.blogspot.com/2015/08/narrative-resets-revisiting-tech-trio.html
Toward the end of the class, we valued a mature, dividend paying company in ConEd and a mature growth company in 3M, before and after a market crisis.

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/storytest.pdf
Slides: https://nyu.box.com/s/yjiv2pl81dg3o9qiunv1gm8532asurdz
No post-class test or solution

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Valuation Tools Webcast #12: Analyzing data for multiples

Wed, 10 Jun 2026 03:07:00 -0000

Look at how to go from raw data to analyzing and assessing multiples.

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Investing Politics: Making Sense of Trump, Tariffs and Tesla!

Tue, 09 Jun 2026 21:07:00 -0000

In this session, I try to make sense of the chaos engulfing markets, and while the immediate cause may be Trump's tariffs, I argue that what we are seeing unfold in politics and markets in the US and elsewhere is the coming together of two major trends. The first is globalization, an almost unstoppable force that has shifted how businesses and consumers behave over the last four decades, but is not facing a blowback that is largely deserved. The other is disruption, a weapon used by technology firms to alter businesses over the last two decades, but now being used in politics and government. I trace out the likely effects on markets, through interest rates and equity risk premiums, and on companies, where government and politics now become part of company stories (and value). I value Tesla with these cross currents playing out.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/InvestingPolitics.pdf
Tesla valuation: https://pages.stern.nyu.edu/~adamodar/pc/blog/TeslaJan2025DIY.xlsx

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Valuation Tools Webcast #11: Enterprise Value, Firm Value and Equity Value

Tue, 09 Jun 2026 15:07:00 -0000

Looks at the contrast between three widely used measures of market value and how to compute each.

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Session 14: Choosing between investments and Side Costs/Benefits

Tue, 09 Jun 2026 09:07:00 -0000

In this session, we started by comparing NPV versus IRR as decision rules, and why they might yield different answers for mutually exclusive projects, of both same and different lives. Our conclusion was that there is absolute best rule to follow for all companies, since it will depend on your position in the life cycle and access to capital. We then moved on to look at the side costs and benefits embedded in most investment decisions, and why these have to be brought into the analysis, looking at opportunity cot and product cannibalization as examples of side costs and synergies as side benefits.

Slides: https://nyu.box.com/s/ken8hh7tdfelljvuea0k45wqyjz9ck73
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session14test.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session14soln.pdf

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Valuation Tools Webcast #9: Dealing with Employee Options

Tue, 09 Jun 2026 03:07:00 -0000

In this webcast, I look at the process of valuing employee options and incorporating that value into the value of equity per share. I use Cisco to illustrate.
Cisco 10K: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/webcasts/EmployeeOptions/cisco10K.pdf
Cisco Option spreadsheet: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/webcasts/EmployeeOptions/ciscooptions.xls

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Session 14: Closure on stories and numbers and fist valuations!

Mon, 08 Jun 2026 21:07:00 -0000

We started this session by finishing up the discussion of connecting stories to numbers, and how critical it is to keep the feedback loop open. We also looked at how stories can change or break. In that context, you might find this post that I had on how earning reports change stories useful:
https://aswathdamodaran.blogspot.com/2014/08/reacting-to-earnings-reports-narrative.html
We then looked at valuing a simple company (Con Ed) with a simple model (stable growth DDM) and how a market crisis can change value (with 3M). We then moved on to with a, model to value an index (the S&P 500). If you are interested in an updated version, where you can change the numbers try this link:
https://pages.stern.nyu.edu/~adamodar/pc/blog/S&PValueJan2025.xlsx
If it looks familiar, because it was your first valuation of the week in this class.

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests//dcfvaltests.pdf
Slides: https://nyu.box.com/s/6opgmg5a4wosr79itlv02z9o2yyx4nu1
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session14Ctest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session14Csoln.pdf

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Valuation Tools Webcast #8: Terminal Value

Mon, 08 Jun 2026 15:07:00 -0000

The terminal value in a discounted cash flow valuation is the elephant in the room. In this webcast, I look at simple rules to keep it in check.

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Session 16: Valuing the market and companies across the life cycle

Mon, 08 Jun 2026 09:07:00 -0000

We started this class with a model to value an index (the S&P 500). If you are interested in an updated version, where you can change the numbers try this link:
https://pages.stern.nyu.edu/~adamodar/pc/blog/S&P500ValueJan2024.xlsx
If it looks familiar, it is because it was your first valuation of the week.
We then looked at valuing young companies, with the focus on Amazon. If you are interested in how best to adapt valuation models to value companies on the dark side. Specifically, we examined how best to value young companies with limited information. If you are interested, try this paper on valuing young companies:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1418687
I also have a blog post that you may find relevant for today’s discussion on how dilution in future years is already incorporated into value:
http://aswathdamodaran.blogspot.com/2018/07/share-count-confusion-dilution-employee.html
In the last part of the class, we value a mature company (Hormel) with the possibility of a change in management, and concluded the expected value will depend on the chance of that change occurring.

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/dcfvaltests2.pdf
Slides: https://nyu.box.com/s/3ok83tpehjwv9qt9vv10j0yz3519cr2n
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session16Dtest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session16Dsoln.pdf

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Valuation Tools Webcast #7: Measuring Accounting Returns

Mon, 08 Jun 2026 03:07:00 -0000

The return on equity and invested capital are key to estimating growth and value at companies, but they are accounting numbers and need tender care and attention.
Walmart (2013): http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/ROIC/walmart10K.pdf
Walmart (2012): http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/ROIC/walmart10Klastyear.pdf
Spreadsheet:http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/ROIC/walmartreturncalculator.xls

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Session 15: Celsius Case Analysis, Real Options and Investment Post-mortems

Sun, 07 Jun 2026 21:07:00 -0000

In this class, we started with a discussion of the Celsius case, and the case presentation and case analysis (Excel file links) are below:
Case:
https://pages.stern.nyu.edu/~adamodar/pdfiles/cfexams/CelsiusEats.pdf
Presentation: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfexams/CelsiusPresentation.pdf
Excel file: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfexams/CelsiusEatssoln.xlsx
While we did spend time on the details of the case, here were some general lessons that I hope you take away:
1. When a project creates cash flows in different businesses with different risks, the discount rates used have to reflect those differential risks. I kept the cash flows separate for food and beverages and used different costs of capital for each one.
2. When a project uses up a resource, you have to factor that cost in, but you have to do so by looking at what will happen if you do not take the project as well. In the context of capacity, the clinic project will lead to capacity being used up earlier (in year 5) rather than later (in year 11). It is the difference in the present values of these costs that should be considered, not just the cost of investing in year 5.
3. When you decide to alter a project from finite life to a longer life, you have to behave differently in how you manage the project from the very beginning. In short, lengthening a project life is a trade off, where you settle for lower cash flows over the project life, in return for a higher ending value. In Celsius Eats terms, this will show up as more capital maintenance expenditures with the longer life than with the finite life.
After the case, we looked at side costs and side benefits from projects, and how it is critical that we go beyond the hand waving (it is strategic, or good things will happened) to trying to make our best estimates of these costs and benefits and bringing them into the analysis.

Slides: https://nyu.box.com/s/g5r2apd0wtycyx8ydbrsyb3ja0vjk8kb
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session15test.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session15soln.pdf

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Valuation Tools Webcast #4: Capitalizing Leases

Sun, 07 Jun 2026 15:07:00 -0000

Accountants routinely miscategorize leases and treat them as operating expenses (instead of financial expenses). In this webcast, I look at the process of capitalizing leases and how it affects earnings, debt and invested capital. I use Disney's annual report from 2012 to illustrate the process:
Disney annual report (2012): http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/Regression/DisneyAnnualReport2012.pdf
Spreadsheet: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/webcasts/Leases/Disneyratings.xlsx

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Session 15: Valuations across the life cycle

Sun, 07 Jun 2026 09:07:00 -0000

In this session, we completed our the challenges in valuing young companies, and then took a look at mature companies in transition, and how you have to value the status quo company and the restructured one to make a judgment on investing in it. We then moved on and looked at declining companies, where your forecasts may have to show declining revenues and margins, and added a twist with distressed companies, where you have to follow up your DCF, by estimating a likelihood of failure and the value of your equity if that happens.

Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/dcfvaltests2.pdf
Slides: https://nyu.box.com/s/i26bvwm05of5b9yvmrjgw9w5jjyqbhrp
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session15Ctest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session15Csoln.pdf

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Valuation Tools Webcast #5: Capitalizing RandD

Sun, 07 Jun 2026 03:07:00 -0000

R&D is really capital expenditures (for technology and pharmaceutical companies) but accountants treat it as operating expenses. In this webcast, I look at the process of capitalizing R&D and how it affects earnings and reinvestment rates. I use Microsoft to illustrate the process.
Microsoft 10K (2012): http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/webcasts/R&D/Microsoft10K.docx
Microsoft 10K (2011): http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/webcasts/R&D/Microsoftlastyear10K.docx
Spreadsheet: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/webcasts/R&D/MicrosoftR&D.xls

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Session 17: Valuing Declining, Emerging Market and Financial Service companies

Sat, 06 Jun 2026 21:07:00 -0000

In this class, we continued discussing companies on the dark side of valuation. First, we talked about valuing declining and emerging market companies, and the challenges we face with each, before turning our attention to financial service firms For decades, we have valued banks using the dividend discount model, simply because getting cash flows is so difficult, but that approach is built on trusting management at banks to behave sensibly (paying out what they can afford to in dividends) and regulators to do the same. For me, that trust was breached in 2008, and I present a way of estimating FCFE for a bank, using investment in regulatory capital as my stand in for reinvestment. In the first session after the break, we will wrap up the valuation section and start on pricing. If you are interested in reading more about valuing financial service companies, try this link:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1798578

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/dcfvaltests3.pdf
Slides: https://nyu.box.com/s/wnt6f0nxmtmu5knx30idhvzqpn9cfqhi
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session17Dtest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session17Dsoln.pdf

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Valuation Tools Webcast #6: Estimating Trailing 12-month number

Sat, 06 Jun 2026 15:07:00 -0000

The key to getting an updated value is working with updated numbers. In this webcast, I look at how use an annual and quarterly report to construct a twelve-month earnings number. I use Apple's 10K from 2012 and a 10Q from 2013 to illustrate the process:
Apple 10K: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/TTM/Apple10K.pdf
Apple 10Q: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/TTM/Apple10Q.pdf
Spreadsheet: http://www.stern.nyu.edu/~adamodar/pc/blog/AppleTTM.xls

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Session 16: The Debt Equity Tradeoff

Sat, 06 Jun 2026 09:07:00 -0000

In this class, we started our discussion of the financing question by drawing the line between debt and equity: fixed versus residual claims, no control versus control, and then used a life cycle view of a company to talk about how much it should borrow. We then started on the discussion of debt versus equity by looking at the pluses of debt (tax benefits, added discipline) and its minuses (expected bankruptcy costs, agency cost and loss of financial flexibility). Even with the general discussion, we were able to look at why firms in some countries borrow more than others, why having more stable earnings can make a difference in how much you can borrow and why having intangible assets can affect your borrowing capacity. Towards the end of the class, we used the trade off to derive the Miller Modigliani theorem and establish a financing hierarch at firms.

Slides:
Post class test: https://nyu.box.com/s/zy5j5sncqrfo7ev3naw7aio0daulhxg0
https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session16AXtest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session16AXsoln.pdf

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Valuation Tools Webcast #3: Implied Equity Risk Premiums

Sat, 06 Jun 2026 03:07:00 -0000

Look at what an implied ERP is and how best to compute it. It is a central input into corporate finance and valuation.

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Session 16: Closure on Intrinsic Value

Fri, 05 Jun 2026 21:07:00 -0000

In this session, we started with a discussion of whether to concentrate or diversify your portfolio and my (very old) blog post on the topic:
https://aswathdamodaran.blogspot.com/2011/11/how-much-diversification-is-too-much.html
We continued with our discussion of intrinsic valuation, by first finishing our discussion of emerging market companies before turning to financial service firms . For decades, we have valued banks using the dividend discount model, simply because getting cash flows is so difficult, but that approach is built on trusting management at banks to behave sensibly (paying out what they can afford to in dividends) and regulators to do the same. For me, that trust was breached in 2008, and I present a way of estimating FCFE for a bank, using investment in regulatory capital as my stand in for reinvestment. Next session, we will wrap up the valuation section and start on pricing. If you are interested in reading more about valuing financial service companies, try this link:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1798578
The Deutsche Bank post is here:
http://aswathdamodaran.blogspot.com/2016/10/deutsche-bank-greek-tragedy-at-german.html
In the context of valuing commodity companies, I talked about how Monte Carlo simulations can help deal with uncertainty. If you decide to go that route, you can use Crystal Ball (an add on to Excel and freely available to Stern students) to make your excel spreadsheet valuation into a simulation. Finally, in the context of talking about value vs price, and the efficient market view of the gap, I mentioned a documentary on efficient market investing. Here is the WSJ article linking to it:
https://www.wsj.com/finance/investing/investing-david-booth-errol-morris-documentary-4dd7ff80?mod=wsjhp_columnists_pos_3

Start of the class test: https://nyu.box.com/s/gyi2e2gleyq9p9plzxgpis2ct83cwfmkhttps://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/dcfvaltests3.pdf
Slides: https://nyu.box.com/s/gyi2e2gleyq9p9plzxgpis2ct83cwfmk
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session16Ctest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session16Csoln.pdf

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Valuation Tools Webcast #2: Estimating Risk free Rates

Fri, 05 Jun 2026 15:07:00 -0000

A webcast on how to estimate the risk free rate in any currency.

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Session 18: Intrinsic Value Closure and Pricing Beginnings

Fri, 05 Jun 2026 09:07:00 -0000

In the context of valuing commodity companies, I talked about how Monte Carlo simulations can help deal with uncertainty. If you decide to go that route, you can use Crystal Ball (an add on to Excel and freely available to Stern students) to make your excel spreadsheet valuation into a simulation. Finally, in the context of talking about value vs price, and the efficient market view of the gap, I mentioned a documentary on efficient market investing. Here is the WSJ article linking to it:
https://www.wsj.com/finance/investing/investing-david-booth-errol-morris-documentary-4dd7ff80?mod=wsjhp_columnists_pos_3
We then moved on to the gap, the different views of the gap and why that gap might or might not close.
In the second part of the class, we turned to pricing, and laid the framework for thinking about multiples as standardized prices, and why it is critical that we make sure that they are consistently defined and uniformly estimated.

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relval1test.pdf
Slides: https://nyu.box.com/s/n3afpimdjmu4yqlhguq0nh74xmpfiusw
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session18Btest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session18Bsoln.pdf

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Valuation Tools Webcast #1: Getting Data

Fri, 05 Jun 2026 03:07:00 -0000

A webcast on how to get data/information on companies so as to assess their corporate finance health & value.

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Session 17: Pricing 101

Thu, 04 Jun 2026 21:07:00 -0000

We started the class by setting the stage of pricing companies, contrasting the pricing process with the value process. The rest of the class was our first foray into pricing, with why pricing is so much more common than intrinsic value and how multiples are just standardized prices. We also started on the first steps in deconstructing pricing, with the definitional tests, before moving on playing Moneyball with the data and determining the variables that you should control for, when pricing.

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relval1test.pdf
Slides: https://nyu.box.com/s/8p08ectzlnvlytnfkbss4ita9cshn7g5
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session17Btest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session17Bsoln.pdf

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Session 1: Setting up the class

Thu, 04 Jun 2026 15:07:00 -0000

Sets the table for the 26-session valuation class, Fall 2014.

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Session 17: Optimizing the Debt Mix with Cost of Capital approach

Thu, 04 Jun 2026 09:07:00 -0000

We started this class by looking at how the cost of capital can be used to optimize the right mix of debt and equity. In effect, you estimate the costs of debt and equity at different debt ratios, and try to find the mix of debt and equity that minimizes your cost of capital. If you want to try your hand at using the spreadsheet to optimize debt ratio, try the following:
http://www.stern.nyu.edu/~adamodar/pc/capstru.xlsx
We will continue with this discussion next class. looking at limits to the approach, and variants

Slides: https://nyu.box.com/s/bdtnk9929ndg1244jtocavcy7tara86m
Post class test:
https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session17test.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session17soln.pdf

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Session 9: Random Walks and Momentum

Thu, 04 Jun 2026 03:07:00 -0000

If markets follow a random walk, the price change in the next period should not only be independent of past price changes and completely unpredictable. Rather than debate the theoretical underpinnings of the random walk hypothesis, we look at the evidence on whether price changes in consecutive time periods are correlated and come to wildly divergent conclusions, depending on the time period in question. With very short intervals (minutes or hours), there is little detectable correlation, with much of the observed correlation being caused by market microstructure effects (the bid ask spread and liquidity). With daily or even weekly returns, the correlation turns negative, with paper profits to be made of the price reversals. As you go from weeks to months, the correlation turns positive with price momentum carrying the day. Finally, as you look at returns over many years (3 to 5 years), price reversals become the rule rather than the exception. This instability explains why it is so difficult for momentum investors to keep making money, since the key to making money seems to be avoiding the inflection points where momentum turns to reversal.

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Session 19: Pricing Continued

Wed, 03 Jun 2026 21:07:00 -0000

In this session, we continued with our discussion of pricing, starting with the analytics that drive PEG, PBV, EV/EBITDA and revenue multiples. During the session, I played the role of a naive equity research analyst, using sloppy pricing to push buy recommendations on stocks in a number of sectors, based purely on the level of multiples (low PE, low PBV etc.) and asking for pushback. I The bottom line, though, is that most companies that look cheap deserve to be cheap. The key to pricing is finding a mismatch between the pricing and the fundamentals (low PE & high growth, low PBB and high ROE, low EV to Sales and high margins). It is the basis for much of equity research, and takes the form of screens. If you are interested, I have a post that expands on the notion of screening.
http://aswathdamodaran.blogspot.com/2012/06/passive-value-investing-screening-for.html

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relval2test.pdf
Slides: https://nyu.box.com/s/hypc3jgk9jpsg436eisuvkb1bt9pgy4b
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session19Ctest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session19Csoln.pdf

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Session 8: Market Efficiency - Testing Market Beating Schemes

Wed, 03 Jun 2026 15:07:00 -0000

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Session 18: Finishing up with Cost of Capital Optimization

Wed, 03 Jun 2026 09:07:00 -0000

In this quiz-shortened class, we started by tying up loose ends on the cost of capital approach, starting with why moving to the optimal changes the value of a business (hint: it is all in the tax code) and then looking at how sensitive the optimal debt ratio is to changes in operating income or rating constraints. We also looked at enhancements to the approach, where we incorporated indirect bankruptcy costs in the analysis.
Slides: https://nyu.box.com/s/kw5jw5h1leu72muzlqjdt0079qo2rwvg
Post class test:
https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session18test.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session18soln.pdf

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Session 7: Market Efficiency - Laying the Groundwork

Wed, 03 Jun 2026 03:07:00 -0000

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The Anatomy of a Crisis: Tariff Talk and Market Reaction!

Tue, 02 Jun 2026 21:07:00 -0000

The Trump tariffs announced on Wednesday have clearly unsettled markets, both in their breadth and magnitude. As stocks go into meltdown model across the globe, I take a look at the damage to equity values on Thursday (April 3) and Friday (April 4), across sectors, market cap classes and other segments. To get a sense on how this crisis will play out in markets, I break down a crisis cycle, using the 2008 banking and the 2020 COVID crises to illustrate. The Tariff Criss is still in its early days, but if history is any guide, there will be aftershocks that increase volatility and create more downside, there will be near term negatives for the economy and in the long term, while global growth is likely to be low, the global economic pie will be reapportioned, with winners and losers.

Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/TariffCrisis.pdf
ERP by day for Tariff Crisis: https://pages.stern.nyu.edu/~adamodar/pc/blog/TariffERPbyday.xlsx

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Session 6: Trading Costs and Taxes

Tue, 02 Jun 2026 15:07:00 -0000

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Session 18: Tariff Talk and Market PE ratios

Tue, 02 Jun 2026 09:07:00 -0000

In this quiz shortened session, we spent the bulk of the class talking about the tariff damage to equities, and if you are interested, the blog post is now up and running:
https://nyu.box.com/s/7c3a0b8oyxny6mog7tplpvsprjss73ww
You can also find the slides I used in class here:
https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/TariffCrisis.pdf

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Session 5: Valuation - The Basics

Tue, 02 Jun 2026 03:07:00 -0000

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Session 20: Tariff Talk

Mon, 01 Jun 2026 21:07:00 -0000

In this quiz-shortened class, we talked almost entirely about the tariff announcements last week (April 2, 2025) and the market reaction to those announcements.
Slides: https://nyu.box.com/s/xht73un1278zaltjgexonhde9llznhnd

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Session 4: Financial Statement Analysis

Mon, 01 Jun 2026 15:07:00 -0000

In investing, we are dependent upon accounting statements for raw data in assessing companies. In this session, we look at the three basic financial statements: the balance sheet, where we record what a company owns and owes at a point in time, the income statement, where we measure revenues, expenses and earnings during a period and the statement of cash flows, where we explain changes in cash balances by looking at operating, investing and financing cash flows. We look at how a financial perspective can vary from an accounting perspective in each of these statements.

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Session 19: The APV and Peer Group Approaches to Financing Mix

Mon, 01 Jun 2026 09:07:00 -0000

We started this class by first looking at the determinants of optimal debt rations and then looked at how to optimize debt mix with the adjusted present value approach, where we begin with the unlevered firm value, and then add the tax benefits of debt and net out expected bankruptcy costs. While you can download the APV spreadsheet that I have online, I don’t really see a need to do the APV analysis of your company’s capital structure, since the expected bankruptcy cost is a black box. We then looked at peer group analysis, where companies decide how much to borrow by looking at what other companies in the sector do. You can check out the debt ratios for other companies in your sector by going to my website:
US industry averages: http://www.stern.nyu.edu/~adamodar/pc/datasets/dbtfund.xls
Global industry averages: http://www.stern.nyu.edu/~adamodar/pc/datasets/dbtfundGlobal.xls
I also mentioned market-wide regressions on the debt ratios of companies. You can find those at
https://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/dbtreg25.htm

Slides: https://nyu.box.com/s/imlitrcrwhm7f1hcongohfneyb74key5
Post class test:
https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session19test.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session19soln.pdf

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Session 3: Understanding risk - The risk in stocks

Mon, 01 Jun 2026 03:07:00 -0000

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Session 21 (UG) and Session 19 (MBA): Pricing Analytics and Peer Groups

Sun, 31 May 2026 21:07:00 -0000

During thisclass, we started by continuing to examine how to deconstruct multiples to determine what drives each multiple, using an intrinsic value model as a starting point and employing algebra for two reasons:
1. It yields a construct for creating your perfect cheap company (low PE, high growth, low risk, high payout etc.) that you can then use as a basis for screening fo cheap stocks. In fact, I have a generic post on screening built around this:
https://aswathdamodaran.blogspot.com/2012/06/passive-value-investing-screening-for.html
2. It gives you questions you can ask, when presented with a stock to buy or sell, based upon a pricing. (This company is cheap because it trades at 4 times EBITDA, for example…)
3. It yields insight into each multiple’s companion variable, the one number you need to know to use a multiple well. (PE (growth), PBV (ROE), EV/Sales (Operating margin)
While the examples that I used in class are dated, they were meant to illustrate this process, and how statistics can be used as a tool.

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relval2btest.pdf
Slides: https://nyu.box.com/s/vb7rgx0akt21k5crcwwos9n0cq948wip
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session21Ctest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session21Csoln.pdf

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Session 2: Understanding Risk - The Risk in Bonds

Sun, 31 May 2026 15:07:00 -0000

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Session 20: Debt Design

Sun, 31 May 2026 09:07:00 -0000

In this class, we looked at the design principles for debt. We started by completing a five step process for designing the perfect debt before looking at both intuitive and quantitative ways of debt design. In particular, we looked at a macro economic regression of firm value/operating income against interest rates, GDP, inflation and exchange rates. Keeping in mind the objective of matching debt to assets, think about the typical investments that your firm makes and try to design the right debt for the project. If your firm has multiple businesses, design the right kind of debt for each business. In making these judgments, you should try to think about
- whether you would use short term or long term debt
- what currency your debt should be in
- whether the debt should be fixed or floating rate debt
- whether you should use straight or convertible debt
- what special features you would add to your debt to insulate the company from default
Your objective is to get the tax advantages without exposing yourself to default risk.
If you want to carry this forward and do a quantitative analysis of your debt, you can try regressing enterprise value and operating income at your firm against macroeconomic variable. The spreadsheet below helps you do that:
http://www.stern.nyu.edu/~adamodar/pc/macrodur.xlsx
It has annual and quarterly data through 2024. Just a warning that it is extremely noisy and may spit out output that does not make sense. It also contains the sector averages, broken down by SIC code.

Slides: https://nyu.box.com/s/5tu5br3d07oc5z8o2sgi2zbul2gaw9m7
Post class test:
https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session20test.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session20soln.pdf

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Investment Philosophies: Overview of class

Sun, 31 May 2026 03:07:00 -0000

Provides an overview of the class

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Session 20: Pricing Closure and Asset-based Valuation/Pricing

Sat, 30 May 2026 21:07:00 -0000

In this session, we started by closing the chapter on pricing, with pricing across an entire market (using a market regression). We then looked at asset based valuation: liquidation valuation, accounting valuation and sum of the parts valuation. Specifically, we focused on when it makes sense to value a company by valuing its assets and what pitfalls to avoid. If you are interested in a more extensive assessment of companies like United Technologies, you may find this reading useful:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1609795
We then started our discussion of the valuation of private companies by noting how the lack of a market price for a business can affect your valuation in implicit and explicit ways, and then arguing that the value you attach to a private business can depend on why/for whom you are doing the valuation.

Slides: https://nyu.box.com/s/d9z0i74oxs7myxq8lmvcqpraa1f75xtu
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session20Atest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session20Asoln.pdf

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Session 10: Temporal Patterns

Sat, 30 May 2026 15:07:00 -0000

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Session 22: Pricing Closure and Asset-based Valuation/Pricing

Sat, 30 May 2026 09:07:00 -0000

In this session, we started by closing the chapter on pricing, with pricing across an entire market (using a market regression). We then looked at asset based valuation: liquidation valuation, accounting valuation and sum of the parts valuation. Specifically, we focused on when it makes sense to value a company by valuing its assets and what pitfalls to avoid. If you are interested in a more extensive assessment of companies like United Technologies, you may find this reading useful:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1609795
We then started our discussion of the valuation of private companies by noting how the lack of a market price for a business can affect your valuation in implicit and explicit ways, and then arguing that the value you attach to a private business can depend on why/for whom you are doing the valuation.

Slides: https://nyu.box.com/s/hfivaq34l5klapbji6e3nm1cazuf7vvk
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22Btest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22Bsoln.pdf

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Session 22: Pricing Closure and Asset-based Valuation/Pricing

Sat, 30 May 2026 09:07:00 -0000

In this session, we started by closing the chapter on pricing, with pricing across an entire market (using a market regression). We then looked at asset based valuation: liquidation valuation, accounting valuation and sum of the parts valuation. Specifically, we focused on when it makes sense to value a company by valuing its assets and what pitfalls to avoid. If you are interested in a more extensive assessment of companies like United Technologies, you may find this reading useful:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1609795
We then started our discussion of the valuation of private companies by noting how the lack of a market price for a business can affect your valuation in implicit and explicit ways, and then arguing that the value you attach to a private business can depend on why/for whom you are doing the valuation.

Slides: https://nyu.box.com/s/hfivaq34l5klapbji6e3nm1cazuf7vvk
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22Btest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22Bsoln.pdf

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Session 11: Technical Analysis

Sat, 30 May 2026 03:07:00 -0000

In this session, we look at charts and technical indicators as predictors of stock prices. Rather than provide a laundry list of technical indicators, we classify them into five groups, based upon the “behavioral” component that each tries to exploit. In the first group we include “contrarian” indicators, which try to measure what a group of investors (small individual investors, mutual funds, financial newsletter writers) think about the market with the intent of doing the opposite. In the second, we look at indicators that try to get ahead of shifts in demand and supply that will affect prices. In the third, we exploit slow learning in markets by using momentum indicators, hoping to generate profits as the markets adjust to good or bad news slowly. In the fourth, we identify experts or investors who are more knowledgeable than we are and try to follow their actions. In the fifth, we include long term (and mystical) indicators that are built on the presumption that there are long-term waves (that are both predictable and unstoppable) that drive market movements.

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Session 21: Dividends and Cash Return - First Steps

Fri, 29 May 2026 21:07:00 -0000

We started this class with the third and final quiz of the class, before moving on to the dividend principle. We started with an assessment of what dividends would look like if they were truly residual cash flows before looking how they have evolved in practice - they are sticky, they follow earnings and the shift towards buybacks in recent decades, and how that shift can be explained by the increased desire for flexibility among companies that face more uncertainty about future earnings. We then moved on to two measures of dividend policy - dividend payout and yield, before looking at three schools of thought on dividends that cover the spectrum (dividends don’t matter, dividends are bad, dividends are good)., We ended the class by looking at two bad reasons for paying dividends (that they are more certain, that you had a good year). In the next class, we will talk about three good reasons for paying dividends as well as a way of measuring how much cash can be returned (FCFE).

Slides: https://nyu.box.com/s/wqzbi9iifg4zc6gkkraegand13qkdspm
Post class test:
https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session21test.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session21soln.pdf

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Session 12: Introduction to Value Investing

Fri, 29 May 2026 15:07:00 -0000

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Session 21: Valuing Privately owned businesses (not publicly listed)

Fri, 29 May 2026 09:07:00 -0000

In this session, we started by looking at the challenges of valuing private-to-private transactions, where the buyer of a private business is undiversified and cares deeply about illiquidity, and how the values are depressed as a consequence. We then drew a contrast to the same company being valued by a public company, and argued that this should lead to private businesses increasingly become parts of public companies or going public themselves. In the final section of the class, we looked at valuing/pricing IPOs, and how to deal with offer proceeds from the IPO and the IPO process itself.

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/pvtcotest.pdf
Slides: https://nyu.box.com/s/epdhx3zqpmiyvpp6r9v4e3qtb8m80hyn
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session21Ftest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session21Fsoln.pdf

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Session 13: Value Investing - The Passive Screeners

Fri, 29 May 2026 03:07:00 -0000

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Session 23: Private company valuation

Thu, 28 May 2026 21:07:00 -0000

In this session, we started by looking at the challenges of valuing private-to-private transactions, where the buyer of a private business is undiversified and cares deeply about illiquidity, and how the values are depressed as a consequence. We then drew a contrast to the same company being valued by a public company, and argued that this should lead to private businesses increasingly become parts of public companies or going public themselves. In the final section of the class, we looked at valuing/pricing IPOs, and how to deal with offer proceeds from the IPO and the IPO process itself.

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/pvtcotest.pdf
Slides: https://nyu.box.com/s/7b3ril0e7dh7vpuqtdhygh9xw2u13ize
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session23Ftest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session23Fsoln.pdf

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Session 15: Value Investing - The Activists

Thu, 28 May 2026 15:07:00 -0000

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Buy the Dip? The Allure and Dangers of Contrarian Investing

Thu, 28 May 2026 09:07:00 -0000

During market corrections and drops, the advice that is offered by some is to buy the dip, a strategy that is part of contrarian investing, where your actions are in contrast to much of the rest of the market. In this session, I look at four strands of contrarian investing starting with knee-jerk contrarianism, where you buy the biggest losers (stocks, sectors and markets, expecting a rebound, moving on to technical contrarianism, where you buy after a market beatdown, but only if the charts and technical indicators suggest that a bottom has been reached, pivoting to constrained corporatism, where you screen losing stocks for pricing, profitability and risk characteristics to keep out value traps and ending with what I call opportunistic corporatism, where you use market selloffs as an opportunity to buy stocks that you have always wanted to buy, but were unable to, because they were too highly priced. I close the session by looking at the combination of mindset (march to your own drummers), time horizon (adaptable but willing to wait long periods and stomach (for the market moving in the wrong direction) that you need to be able to succeed at contrarian investing.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/Contrarian.pdf

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Session 18: Get in on the ground floor - The IPO story

Thu, 28 May 2026 03:07:00 -0000

In this session, we look at the process by which private businesses enter the public market place and whether investors can exploit frictions in that process to generate higher returns. We begin by describing the sequence of an initial public offering, from the investment banking underwriting agreement to the final offering date. We then examine the behavior of IPOs on the offering date, where, at least on average, the stock price jumps about 10-15% from the offering price. Trying to capture this “under pricing “ is difficult for investors to do for three reasons: a selection bias, where you tend to be over invested in over priced IPOs and under invested in under priced ones, a “hot and cold” markets problem, where you find almost nothing to invest in during cold IPO periods and too many choices in hot periods and a post-issue timing quandary, where you can lose most of your profits if you hold an IPO too long. We conclude on an optimistic note, by looking at ways you can modify the strategy to counter all three problems.

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Session 22: Dividend Trade offs

Wed, 27 May 2026 21:07:00 -0000

Win this quiz-shortened session, we started by looking at three schools of thought on dividends that cover the spectrum (dividends don’t matter, dividends are bad, dividends are good)., We ended the class by looking at two bad reasons for paying dividends (that they are more certain, that you had a good year), and with one good reason - a clientele that likes dividends.

Slides: https://nyu.box.com/s/gn2l44n0zw1zv1tuet4i507pd3sa9n01
Post class test:
https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session22test.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session22soln.pdf

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Session 14: Value Investing - The Contrarians

Wed, 27 May 2026 15:07:00 -0000

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Session 22: Closure on IPOs and Introduction to Real Options

Wed, 27 May 2026 09:07:00 -0000

After we got the third quiz done, we moved on to looking at real options in corporate finance and valuation. We started by looking at the basic option pricing models, and the ingredients that make for real option applications - that there be an option at play (with an underling asset and contingent cash flows), that the option have significant economic value (and the importance of exclusivity) and that the conditions for option pricing model hold (that the asset and the option be traded…).

Slides: https://nyu.box.com/s/e0jzx09272hhdze0du1hwc5wv1yfy1ub
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22Ftest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22Fsoln.pdf

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Session 17: Investing on Hope - Growth and Small Cap Investing

Wed, 27 May 2026 03:07:00 -0000

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Session 24: IPO Closure and Introduction to Real Options

Tue, 26 May 2026 21:07:00 -0000

In this quiz-shortened session, we moved on to first finishing our discussion of IPOs (and alternatives). If you are interested, I have a post on how the IPO process will shake out in future years:
https://aswathdamodaran.blogspot.com/2019/10/disrupting-ipo-process-challenging.html
We then moved on to looking at real options in corporate finance and valuation. We started by looking at the basic option pricing models, and the ingredients that make for real option applications - that there be an option at play (with an underling asset and contingent cash flows).

Start of the class test: https://nyu.box.com/s/jglnvbeqs230brkg7omajagyffgg8d4p
Slides: https://nyu.box.com/s/7b3ril0e7dh7vpuqtdhygh9xw2u13ize
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session24Ftest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session24Fsoln.pdf

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Session 16: Value Investors - where's the beef?

Tue, 26 May 2026 15:07:00 -0000

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Session 23: Assessing Dividend (and Cash Return) Policy

Tue, 26 May 2026 09:07:00 -0000

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Session 26: Information Trading - Public information, other than earnings

Tue, 26 May 2026 03:07:00 -0000

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Session 23: Patents and Natural Resources as Options

Mon, 25 May 2026 21:07:00 -0000

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Session 20: Activist Growth Investing - Be your own change agent

Mon, 25 May 2026 15:07:00 -0000

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Session 25: Patents and Natural Resource Options

Mon, 25 May 2026 09:07:00 -0000

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Session 19: Growth Investing - Growth at a reasonable price (GARP)

Mon, 25 May 2026 03:07:00 -0000

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Session 24: Closure on Dividends and First Steps on Valuation

Sun, 24 May 2026 21:07:00 -0000

In this class, we started by using the dividend assessment process of looking at FCFE/cash return and then gauging trust in management, using the companies that we have used as lab experiments in the class (Vale in 2013, Tata Motors in 2013) and peer group analysis. In the process, we looked at why it is so difficult to get out of a dysfunctional dividend policy, as control trumps sanity and worries about the short term and peer group comparable delay action. We then started on valuation as the place where all of the pieces of corporate finance come together - the end game for your investment, financing and dividend decisions. We then looked at how these numbers can be different depending on whether you take an equity or firm perspective to valuation and what causes these numbers to change. Ultimately, though, the best way to learn valuation is by playing with the numbers and seeing how value changes.

Slides: https://nyu.box.com/s/v7ztvngqpkjlljaiec2m6qi2b3zt7fv4
Post class test:
https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session24test.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session24soln.pdf

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Session 21: Growth Investing - Against the tide of history?

Sun, 24 May 2026 15:07:00 -0000

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Session 24: Distressed Equity as an Option and Acquisition Valuation

Sun, 24 May 2026 09:07:00 -0000

We started this session by looking at the value of flexibility through the option pricing lens and concluding that the value of flexibility is greatest at capital constrained firms, with uncertain and lucrative investment opportunities. We then turned to looking at distressed equity as an option, focusing on money-losing companies with a lot of debt, and used that template to talk about why equity in deeply troubled firms can continue to trade in the face of financial adversity, how equity investors can shift risk at highly levered firms and why equity in conglomerates can become less valuable, even if you buy companies are fair value. I am sorry if you found the rest of today's session to be a downer. Don't get me wrong. Acquisitions are exciting and fun to be part of but they are not great value creators and in today's sessions, I tried to look at some of the reasons. While the mechanical reasons, using the wrong discount rate or valuing synergy & control right, are relatively easy to fix, the underlying problems of hubris, ego and over confidence are much more difficult to navigate.

Slides: https://nyu.box.com/s/s9f2e5o7eduyf9divkh0840793h3mho8
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session24test.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session24soln.pdf

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Session 23: Information Trading - Following the insiders

Sun, 24 May 2026 03:07:00 -0000

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Session 26: Distressed Equity as an Option and Acquisition Valuation

Sat, 23 May 2026 21:07:00 -0000

We started this session by looking at the value of flexibility through the option pricing lens and concluding that the value of flexibility is greatest at capital constrained firms, with uncertain and lucrative investment opportunities. We then turned to looking at distressed equity as an option, focusing on money-losing companies with a lot of debt, and used that template to talk about why equity in deeply troubled firms can continue to trade in the face of financial adversity, how equity investors can shift risk at highly levered firms and why equity in conglomerates can become less valuable, even if you buy companies are fair value. I am sorry if you found the rest of today's session to be a downer. Don't get me wrong. Acquisitions are exciting and fun to be part of but they are not great value creators and in today's sessions, I tried to look at some of the reasons. While the mechanical reasons, using the wrong discount rate or valuing synergy & control right, are relatively easy to fix, the underlying problems of hubris, ego and over confidence are much more difficult to navigate.

Slides: https://nyu.box.com/s/kyh3gc3ygzx5wfywlfb70u15y7a0nlvx
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session26Atest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session26Asoln.pdf

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Session 27: Too Good to be true? Pure Arbitrage

Sat, 23 May 2026 15:07:00 -0000

In this session, we lay down the requirements for pure arbitrage: assets that have identical cash flows that trade at different prices at the same point in time in different markets, with a guarantee that that the price difference will close. We note that pure arbitrage is most likely to occur in the derivatives markets and establish the arbitrage relationships that should govern the pricing of futures and options. With futures on storable commodities and financial assets, we create positions that have the same cash flows and risk using the futures and the underlying assets, and argue that if these positions have different costs, arbitrage is possible. With options, we introduce the notion of a replicating portfolio, where combining the underlying asset with borrowing/lending can create the same cash flows as an option, and argue that arbitrage is possible if the option and the replicating portfolio trade at different prices. We also look at arbitrage across options (calls and puts, options with different strike prices). With both futures and options, we conclude that arbitrage opportunities seem to exist in the early years after a new derivative is listed but fade as investors learn how to price the derivative.

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Session 25: Valuation - The Final Frontier!

Sat, 23 May 2026 09:07:00 -0000

In this session, we continued on the question of how best to value a company by first looking at the drivers of value - revenue growth, margins and reinvestment. We then spent some time talking about terminal value, its disproportionately large role in valuation and the myths that surround it. We brought these ideas together in valuing Baidu, Vale and Disney. I used Disney's valuation to illustrate how choices on investing, financing and dividends play out in value.

Slides:
Post class test: https://nyu.box.com/s/8j459b44omke7dh6xuwlukr6xnbewx1w
https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session25test.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session25soln.pdf

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Session 24: Information Trading - Following the analysts

Sat, 23 May 2026 03:07:00 -0000

In this session, we look at equity research analysts and consider whether following their advice is a market-beating strategy. We begin by looking at earnings estimates from analysts and note that while they are better predictors of actual earnings than time series models (which use only past earnings), the improvement in accuracy is modest and primarily in short term forecasts. We also note that revisions made by analysts to earnings estimates often generate short-term price momentum in stocks, perhaps because analysts can get clients to trade on those revisions. Finally, we look at analyst recommendations, by first reporting on the bias in the process (with positive recommendations vastly outnumbering negative recommendations) and then looking at the price impact of these recommendations. We note that sell recommendations have larger, long-term price impact than buy recommendations and that some analysts have more impact than others, either because their recommendations are built around stronger narratives or because they have more institutional following. A strategy of investing based upon analyst recommendations is unlikely to yield high returns unless it is focused on smaller, less followed companies and more influential, unbiased analysts.

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Session 25: Acquisition Closure + Value Enhancement

Fri, 22 May 2026 21:07:00 -0000

In this class, we continued to make a case against acquisition practices, with transaction multiples, accretion and defensive deals all under fire, before looking at the narrow pathways to generating value from acquisitions (go small, buy private, focus on cost synergies). We then started our discussion of value enhancement, by drawing a contrast between price and value enhancement. With value enhancement, we broke down value change into its component parts: changing cash flows from existing assets, changing growth rates by either reinvesting more or better, lengthening your growth period by creating or augmenting competitive advantages and lowering your cost of capital. In the next and last session for this class, we will use this framework to compute an expected value of control as a the product of the probability of changing the way a company is run and the value increase from that change (optimal - status quo value).

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/valenh.pdf
Slides: https://nyu.box.com/s/tm2dtpm5f9r844rlhz7ky6ek4pofdnqm
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session25test.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session25soln.pdf

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Session 25: Information Trading - Public InformatIon - Earnings Reports

Fri, 22 May 2026 15:07:00 -0000

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Session 27: Closure on Acquisitons + Value Enhancement

Fri, 22 May 2026 09:07:00 -0000

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Session 22: Information Trading - Trading on the news

Fri, 22 May 2026 03:07:00 -0000

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The Greed and Fear Tango: The Markets in April 2025!

Thu, 21 May 2026 21:07:00 -0000

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Session 32: Market Timing Approaches - Mean Reversion and Macro Fundamentals

Thu, 21 May 2026 15:07:00 -0000

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Session 26: The End Game

Thu, 21 May 2026 09:07:00 -0000

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Session 29: Not Riskless - Pseudo and Speculative Arbitrage

Thu, 21 May 2026 03:07:00 -0000

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Session 26: Closing Thoughts (and a discourse of the value of control)

Wed, 20 May 2026 21:07:00 -0000

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Session 35: The case for passive investing -Active Investor Track Records

Wed, 20 May 2026 15:07:00 -0000

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Session 28: The Fat Lady is Singing!

Wed, 20 May 2026 09:07:00 -0000

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Session 31: Market Timing - Nonfinancial and Technical Indicators

Wed, 20 May 2026 03:07:00 -0000

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Ratings Redux: The Moody's US Ratings Downgrade and Aftermath

Tue, 19 May 2026 21:07:00 -0000

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Session 38: The Grand Finale

Tue, 19 May 2026 15:07:00 -0000

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Alternative Investing: Promise and Performance!

Tue, 19 May 2026 09:07:00 -0000

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Session 28: Close Enough? Near Arbitrage

Tue, 19 May 2026 03:07:00 -0000

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To Bitcoin or not to Bitcoin: The Corporate Cash Question

Mon, 18 May 2026 21:07:00 -0000

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Session 37: Passive Investing Choices

Mon, 18 May 2026 15:07:00 -0000

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Country Risk 2025: The Story behind the Numbers!

Mon, 18 May 2026 09:07:00 -0000

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Session 34: Market Timing - Does it Work?

Mon, 18 May 2026 03:07:00 -0000

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The Imitation Game: Defending against AI's Dark Side!

Sun, 17 May 2026 21:07:00 -0000

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Session 36: More in Investor Performance- Continuity and Consistency

Sun, 17 May 2026 15:07:00 -0000

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A "Fairly Highly Valued" (Stock) Market: The Fed Chair Opines but should anyone listen?

Sun, 17 May 2026 09:07:00 -0000

Last week, Jerome Powell called US equities "fairly highly valued", squishy words but words that were viewed as a warning about overpriced US equities . That brought back memories of Alan Greenspan talking about "irrational exuberance" in stocks in the 1990s, though many forget that his warning came in 1996 and the dot-com correction did not happen until five years later. In this session, I start by tracing the performance of stock and bond markets through the first three quarters of 2025, and note the disconnect between the economic news stories, mostly doom and gloom, and market performance. I then look at the metrics investors use to time markets, from pricing performance to PE ratios (in their many forms) to earnings yields (compared to treasury rates) to intrinsic value, and note that those indicators all point in the direction of a "richly priced" US equity market. However, even if you believe that this rich pricing translates to overpricing, I examine why acting on that overpricing is difficult to do, even before you consider taxes and transactions costs. Ultimately, market timing remains the impossible dream, drawing investors in with its allure of profits but leaving them with little to show at the end.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/MktTiming2025.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2025/10/a-fairly-highly-valued-market-fed-chair.html
CAPE Backtesting spreadsheet: https://pages.stern.nyu.edu/~adamodar/pc/blog/ShilleCAPEBacktest.xlsx
Intrinsic value of S&P 500 on September 30, 2025: https://pages.stern.nyu.edu/~adamodar/pc/blog/IntrinsicValueS&P500Sept25.xlsx
Historical implied equity risk premiums: https://pages.stern.nyu.edu/~adamodar/pc/datasets/histimpl.xlsx

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Session 33: Market Timing Approaches - Valuing the Market

Sun, 17 May 2026 03:07:00 -0000

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A Golden Year: Gold's Price Surge in 2025 - Macro Signal or Pricing Noise?

Sat, 16 May 2026 21:07:00 -0000

In 2025, as stock and bond markets climbed walls of worry nonchalantly to set new highs, gold has had a banner year, climbing 57% in the first ten months of the year. In this session, I try to examine what it is about gold that gives it its value and longevity. I look at the price of gold over time, to identify its drivers, and argue that while it is an imperfect hedge against inflation and crises, it does better as insurance extreme events - hyperinflation and potentially catastrophic crises, Using pricing metrics, gold is clearly overpriced given history, but its rise may reflect structural shifts, as investors lose trust in institutions, the US dollar becomes shakier and the global economic world order looks ready for a reset. Gold's place in a portfolio will depend in large part on your risk aversion and views of macroeconomic risk, playing a central role for those who distrust paper currencies and financial asset, operating as insurance against catastrophic risk for others, an instrument to trade for still others and a signal of things to come for some.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/Goldin2025.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2025/11/a-golden-year-2025-golds-price-surge.html
Gold data: https://pages.stern.nyu.edu/~adamodar/pc/blog/golddata2025.xlsx

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Session 30: Market Timing - Setting the Table

Sat, 16 May 2026 15:07:00 -0000

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Trillion dollar Market Caps: Fairy Tale Pricing or Great Businesses?

Sat, 16 May 2026 09:07:00 -0000

A few weeks ago, Nvidia hit a $5 trillion market cap threshold, and while it has retreated since, we have seen a wave of companies breaching the trillion dollar market cap level. When these thresholds are reached, there are two opposing responses, with one (from the value investing group) arguing that this is clearly an overpricing and the other arguing that it is reflective of a changing world. Rather than indulge this debate, where no one wins, I look at reframing the market capitalization of a company in terms of the revenues it will need to justify that market cap, with net margins and returns on equity as drivers. I compute the breakeven revenues for the twelve largest market cap companies in the world, and then put those revenues to what I call the 3P test (Is it possible? Is it plausible? Is it probable?).
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/TrillionMktCap.pdf
Blog Post:
Spreadsheet to compute breakeven revenues (given market cap): https://pages.stern.nyu.edu/~adamodar/pc/blog/MktCapBreakeven.xlsx

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Session 25: Closing Thoughts

Sat, 16 May 2026 03:07:00 -0000

Wrapping up valuation, with closing thoughts.

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Introduction to Investment Philosophies, 3rd Edition

Fri, 15 May 2026 21:07:00 -0000

This is the first video in a series of forty two videos designed to support my book, Investment Philosophies, published by John Wiley. It provides a short introduction to the origins of this book (a class that I taught at Stern almost 25 years ago, and the lessons I learned from the class) to its contents (an overview, with backing from data and research, of different investment philosophies) and an assessment of how the third edition is different from the first two.The book should be available to buy in early 2026, but you can pre-order it now on Amazon and other sites.
Link to Amazon (for pre-order): https://www.amazon.com/Investment-Philosophies-Successful-Strategies-Investors/dp/1394273215/ref=books_amazonstores_desktop_mfs_aufs_ap_sc_dsk_0?_encoding=UTF8&pd_rd_w=tHGVj&content-id=amzn1.sym.299f645c-0a78-440a-94a2-fb482e7cb326&pf_rd_p=299f645c-0a78-440a-94a2-fb482e7cb326&pf_rd_r=136-5766445-8025017&pd_rd_wg=yuvZX&pd_rd_r=878d4de1-b5d8-476d-aadd-eb370efc399f
Webpage for book: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/invphil3edbook.htm
Webpage for class: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcastinvphil2025.htm

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Session 24: Distressed Equity as an option

Fri, 15 May 2026 15:07:00 -0000

Examine how equity in troubled firms with large debt burdens can behave like options, with implications for investing and corporate finance.

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Data Update 1 for 2026: The Push and Pull of Data

Fri, 15 May 2026 09:07:00 -0000

I am not fond of abstract mathematics, but I do love numbers, and at the start of every year since the 1990s, I have played Moneyball with the data for the previous year on individual companies. I take the data from financial filings from companies and from the markets that they trade in, and compute industry averages for the variables that I find myself needing in my corporate financial,, valuation and investing analyses. Since there is little in this data that I will gain from keeping it for myself, I have shared this data with anyone who wants it. In this session, I start with an assessment of why, in the golden age of data (with more data available and accessible than ever before), we feel more off balance than we used to. I then describe my data universe, which includes the 48,156 companies that were publicly traded and had a market price available at the start of 2026, as well as how I approach estimation and who the data might be most useful to.
Blog post: https://aswathdamodaran.blogspot.com/2026/01/data-update-1-for-2026-push-and-pull-of.html
My webpage: damodaran.com
Current data: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datacurrent.html
Archived data: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/dataarchived.html

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Session 16: Other Earnings Multiples

Fri, 15 May 2026 03:07:00 -0000

Extend the discussion to look at operating earnings and EBITDA multiples and their determinants.

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Data Update 2 for 2026: A Test for US Equities

Thu, 14 May 2026 21:07:00 -0000

In 2025, bad news came in waves, with tariffs, political shocks and economic upheavals accumulating, but in the face of this news, stocks were unbowed. I look back at the year that was, and look at the rollercoaster path that US equities took to deliver a return of 17.72% for the year, a middle of the pack return relative to annual returns in the last 98 years, but one that stands out still because it followed two years (2023 and 2024) of very good returns (greater than 20%). Turning to 2026, I examine at how US stocks are positioned, trading at PE ratios close to historic peaks, and look at the earnings and cash flows stories sustaining high stock prices. I close with an estimation of the implied equity risk premium at the start of 2026, a composite number that includes stock prices, earnings, cash return and treasury rates.
Blog Post: https://aswathdamodaran.blogspot.com/2026/01/data-update-2-for-2026-equities-get.html
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate2for2026.pdf
Historical returns on stocks, bonds, bills and other assets: https://pages.stern.nyu.edu/~adamodar/pc/datasets/histretSP.xlsx
ERP at start of 2026: https://pages.stern.nyu.edu/~adamodar/pc/implprem/ERPJan26.xlsx
Historical ERP: https://pages.stern.nyu.edu/~adamodar/pc/datasets/histimpl.xlsx

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Session 18: Revenue Multiples

Thu, 14 May 2026 15:07:00 -0000

Examine why companies trade at different multiples of revenues in different businesses and the determinants of these values.

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Data Update 3 for 2026: The Trust Deficit - From Bonds to Gold to Bitcoin!

Thu, 14 May 2026 09:07:00 -0000

In this session, I start by looking at four news stories in 2025 that shook our trust in US institutions - the tariffs announced at the end of the first quarter, the ratings downgrade for the US two weeks later, the lengthy government shutdown in October/November and the yearlong questions about who would run the Fed. That loss of trust though played out different in different markets. The US bond market, treasuries and corporates, did not skip a step and seemed to take the loss of trust in stride. The currency markets were more shaken, with the dollar losing strength almost across the board. The gold and silver markets were spooked, with price surging, as fear drove at least a subset of investors to move out of financial assets. It is telling that Bitcoin struggled, behaving like equities for a portion of the year, a collectible for some and not quite doing well on either front.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate3for2026.pdf
Blog Post:

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Session 20: Private Company Valuation

Thu, 14 May 2026 03:07:00 -0000

Examine the estimation challenges associated with valuing small or large privately-owned businesses.

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Data Update 4 for 2026: A Tumultuous Year (2025) for Global Markets!

Wed, 13 May 2026 21:07:00 -0000

In 2025, the global backlash that has already upended politics in much of the world came for markets, and in this session, I start with a look at global equity market performance in 2025, before moving on to create a snapshot of country risk at the start of 2026. After a brief discussion of the factors that cause country risk to vary across countries, I look at country risk measures of default risk (sovereign ratings and sovereign CDS spreads) before moving into "my" assessment of equity risk premiums, by country. I close with an analysis of what currencies bring into an analysis, and why if you are consistent, they should not matter in assessing value at a point in time.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate4for 2026.pdf
Blog Post:
Spreadsheet containing country risk measures: https://pages.stern.nyu.edu/~adamodar/pc/datasets/ctrypremium.xlsx

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Session 14: Relative Valuation - First Principles

Wed, 13 May 2026 15:07:00 -0000

Develop a four-step process for deconstructing, understanding and using multiples

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Data Update 5 for 2026: Risk and Hurdle Rates - The 2026 Edition!

Wed, 13 May 2026 09:07:00 -0000

In this session, I move from markets to companies, looking specifically at differences in risk across companies and how these differences play out in hurdle rates, an essential ingredient in both corporate finance and valuation. I start by using the Chinese symbol for risk, a combination of the symbols for danger and opportunity, and introduce a range of risk measures, price and earnings based. Within each one, I look at the distribution across sectors, and then convert the risk measures into costs of equity and capital for companies. If there are messages here, it is that hurdle rates are opportunity costs (not wishes or desires) and that the range across companies remains tight, making spending too much time on getting them estimated is a misuse of your time.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate5for2026.pdf
Blog Post:

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Session 21: The Essence of Real Options

Wed, 13 May 2026 03:07:00 -0000

Lay the foundations for viewing and valuing some assets as options and how it adds to their values.

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Data Update 6 for 2026: In Search of Profitability and Value!

Tue, 12 May 2026 21:07:00 -0000

Milton Friedman posited that the social responsibility of a business is to generate profits,. That view has increasingly come under assault from those who believe that businesses have greater responsibilities to society and the planet, but it has become increasingly clear that trying to muddy up business purpose with social purpose serves neither business nor society well. In this session, I look at the profitability of businesses in 2025, starting with aggregated profits by sector, and then moving to scaled versions of profits. The first scaling is to revenues, and the resulting profit margins give us insight into business economics, from unit economics to economies of sale to the effects of debt and taxes. Not surprisingly, these margins vary widely across sectors and industries. The second scaling is to capital invested, as a basis for then comparing to what this capital could have earned elsewhere on investments of equivalent risk to estimate excess returns. Looking at returns and excess returns across companies, it becomes clear that most companies have trouble earning enough to cover their costs of equity and capital, and that the business landscape is tilted in favor of the largest companies. As we look at the effects of AI, I remain convinced that it will make businesses collectively less profitable, and increase the tilt towards the biggest companies.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate6for2026.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2026/02/data-update-6-for-2026-in-search-of.html
Paper on accounting returns (long and boring): https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1105499.
Data on industry averages
1. Margins for US and Global:
a. US: https://pages.stern.nyu.edu/~adamodar/pc/blog/IndustryMarginsUS.xlsx
b. Global: https://pages.stern.nyu.edu/~adamodar/pc/blog/IndustryMarginsGlobal.xlsx
2. Returns and Excess Returns for US and Global
a. US: https://pages.stern.nyu.edu/~adamodar/pc/blog/IndustryReturnsUS.xlsx
b. Global: https://pages.stern.nyu.edu/~adamodar/pc/blog/IndustryReturnsGlobal.xlsx

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Session 12: Acquisition Ornaments: Synergy, control and complexity

Tue, 12 May 2026 15:07:00 -0000

Look at the value of control and synergy, oft used reasons for acquisitions, as well as the consequences of complexity for value.

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Data Update 7 for 2026: Debt and Taxes

Tue, 12 May 2026 09:07:00 -0000

Every business faces a choice of using either borrowed money (debt) or owner's funds (equity) in financing its operations, and in this sessions I start by looking at illusory reasons for borrowing (debt is cheaper, higher ROE), real reasons for borrowing (tax benefits vs bankruptcy cost) and frictional reasons (desire for control, subsidized debt, protection from bankruptcy). To start my debt assessment for 2025, I look at both tax rates around the world and default during 2025. I then look at measures of debt burden, both in terms of comfort in paying off the debt (interest coverage ratios, debt to EBITDA) as well as debt level (debt to capital ratios) across sectors, in 2025. I end with a discussion of the coming together of two forces - huge investments in cap ex and the rise of private credit, and how if there is a big market delusion, a correction is forthcoming.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate7for2026.pdf
Blog Post:
Industry Averages, by Sector:
Global: https://pages.stern.nyu.edu/~adamodar/pc/blog/DebtIndustryGlobal2025
US: https://pages.stern.nyu.edu/~adamodar/pc/blog/DebtIndustryUS2025.xlsx

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Session 17: Book Value Multiples

Tue, 12 May 2026 03:07:00 -0000

Look at the variables that cause book value multiples (price to book and EV to Investment Capital) to vary across companies and time.

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Data Update 8 for 2026: Dividends and Buybacks - The Investing Harvest!

Mon, 11 May 2026 21:07:00 -0000

In this session, I focus on how and how much cash was returned to shareholders in 2025. While, in theory, companies should wait until after making investments and funding them with the right mix of debt and equity to determine how much cash to return, dividend policy is dysfunctional, with me-too-ism and inertia driving cash return. I look at potential dividends (free cashflows to equity) and actual cash return at US and global companies in 2025, and examine implications for investors who focus entirely or most on dividends and/or cash return.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate8for2026.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2026/02/data-update-8-for-2026-time-for.html
Data links:
Dividends across Industries
1. Global: https://pages.stern.nyu.edu/~adamodar/pc/blog/DividendsIndustryGlobal.xlsx
2. US: https://pages.stern.nyu.edu/~adamodar/pc/blog/DividendsIndustryUS.xlsx
Buybacks across Industries
1. Global: https://pages.stern.nyu.edu/~adamodar/pc/blog/BuybacksIndustryGlobal.xlsx
2. US: https://pages.stern.nyu.edu/~adamodar/pc/blog/BuybacksIndustryUS.xlsx

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Session 19: Asset Based Valuation

Mon, 11 May 2026 15:07:00 -0000

Look at valuation approaches (accounting book value, sum of the parts) that value the assets of a business and aggregate up to value.

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AI Disruption: Doomsday Scenario or Fizzle?

Mon, 11 May 2026 09:07:00 -0000

The AI story has captured attention for the last three years, driving markets and encroaching on our personal lives. For much of that period, that story has been told by AI advocates, who, not surprisingly, have emphasized its good side. In the last few months, there has been some push back on that story, taking the form of negative market reactions to large AI investments by tech companies and in the last week, an outsized market reaction to a doomsday scenario from Citrini, where AI works so quickly and so well at displacing workers that it causes an economic crisis. In reaction, we saw at least a dozen entities release their own scenarios, many with more benign outcomes for the economy. In this session, I provide a framework built around the magnitude and speed of the AI disruption that can be used to assess how possible/plausible/probable each of these scenarios is, and more critically, one that you can use to develop your own, and I close with a postscript that is personal on what you (if you are a target for AI replacement) can do to keep your bot at bay!
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/AIScenarios.pdf
Blog Post: https://bit.ly/4rMUhy9

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Session 11: Loose Ends in Valuation

Mon, 11 May 2026 03:07:00 -0000

To get from operating asset value to equity value, we have to deal with cash, cross holdings and other assets first, then net out debt.

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Session 1 (of 42): Introduction to Investment Philosophies

Sun, 10 May 2026 21:07:00 -0000

In this session, we look at what an investment philosophy is, why you need one to be a successful investor and how best to tailor a philosophy to fit you (in terms of risk aversion, time horizon and tax status).
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session1.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session1test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session1soln.pdf

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Session 13: Loose Ends - Distress, Dilution and Illiquidity

Sun, 10 May 2026 15:07:00 -0000

Look at how best to incorporate the effects of distress, dilution and ill liquidity into the value per share for a company

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Session 2 (of 42): Understanding Risk I: Defining and Measuring Risk

Sun, 10 May 2026 09:07:00 -0000

In this session, we look at what risk is, and how it plays out in investing, by first defining it in its most generic form - a combination of upside and downside. We also look at contrasting measures of risk - total versus just downside, price versus earnings risk, stand-alone versus portfolio risk and why diversfication alters your perception of risk.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session2.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session2Ntest.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session2Nsoln.pdf

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Session 10: Value Enhancement

Sun, 10 May 2026 03:07:00 -0000

Looks at the drivers of value and how management actions can alter the value of a firm, for better or worse.

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Session 3 (of 42): Understanding Risk II: The Risk in Bonds

Sat, 09 May 2026 21:07:00 -0000

In this session, we examine the risks of investing in bonds. Even if the payments on the bond are guaranteed (there is no default risk), you face interest rate risk after you buy the bond and we look at simple measures of interest rate risk exposure. We also look at the additional risk that comes from default, how best to measure that default risk and how much to demand as compensation for exposure to that risk.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session3.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session3Ntest.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session3Nsoln.pdf

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Session 23: The Options to Expand and Abandon

Sat, 09 May 2026 15:07:00 -0000

Look at how the option to expand into new markets/products can add value to young growth companies and the option to abandon investment can create value for flexible companies.

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Session 4 (of 42): Understanding Risk III: The Risk in Equities

Sat, 09 May 2026 09:07:00 -0000

When you invest in the equity of a private or publicly traded company, you get a claim on the residual cash flows of the company. The risks you face can be categorized on three dimensions: price risk versus cash flow risk, total risk versus just downside risk and stand alone risk versus risk added to a portfolio. In this session, we look at the menu of choices that you have as an investor in how best to measure this risk, ranging from theory based models, where the risk is measured as a beta or betas to alternative models, where risk is captured in accounting ratios, proxies, market implied measures and margin of safety.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session4.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session4Ntest.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session4Nsoln.pdf

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Session 9: Terminal Value

Sat, 09 May 2026 03:07:00 -0000

It is the biggest number in any discounted cash flow valuation, and we look at simple rules that keep it in check.

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Session 5 (of 42): Valuation - The Basics

Fri, 08 May 2026 21:07:00 -0000

Can you invest in something without knowing its value? While many people do, it strikes us as imprudent. In this session, we look at the basics of valuation, by laying out the ingredients of an intrinsic valuation model: cash flows, discount rates and growth. In particular, we note the importance of being consistent in your assumptions and note that higher growth can add value or destroy value. In the last part of the session, we look at relative valuation, where we value an asset by looking at how the market is pricing similar assets, and note the importance of controlling for cash flows, growth and risk, when using multiples.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session5.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session5test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session5soln.pdf

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Session 22: The Option to Delay (Patents and Natural Resources)

Fri, 08 May 2026 15:07:00 -0000

Use option pricing technology to value unexercised options and undeveloped natural resource reserves.

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Session 13 (of 42): Value Investing - The Passive Screeners

Fri, 08 May 2026 09:07:00 -0000

In this session, we look at being a passive value screener, using “screens” for cheapness and quality to find the best bargains in the market. We look at earnings screens, book value screens, revenue screens and dividend yield screens, by first noting the intuition behind each screen, then the evidence on how that screen has performed over time and finally the possible weak spots with each screen. We end the session by setting up a general framework for value screening that tries to find mismatches: cheap stocks that have good fundamentals.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session13.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session13test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session13soln.pdf

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Session 15: PE Ratios

Fri, 08 May 2026 03:07:00 -0000

Look at the determinants of PE ratios and how to use them in comparisons across time, markets and companies.

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Session 12 (of 42): Introduction to Value Investing

Thu, 07 May 2026 21:07:00 -0000

In this session, we begin by defining value investing. In our view, value investors invest in companies where they believe that the value from assets in place (investments already made) exceeds the price paid. As a consequence, they are drawn to mature companies in established businesses. Value investing can come in many forms, and there are at least three broad groups of value investors: passive screeners, contrarian investors and activist investors. We close the session by looking at two legends in the value investing space: Ben Graham, whose books represent the basis for value investing and Warren Buffett, whose every word is parsed for meaning by value investors.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session12.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session12test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session12soln.pdf

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Session 1: Introduction to Valuation

Thu, 07 May 2026 15:07:00 -0000

Lays out the rationale for doing valuation as well as the issues of bias, complexity and uncertainty that bedevil it.

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Session 16 (of 42): Value Investing - Where's the beef?

Thu, 07 May 2026 09:07:00 -0000

Value investors often regard themselves as the grown ups in the room, the “sensible” investors in a market that is driven by fads and whims. In this session, we look at the returns earned by value investors and find little cause for celebration. Active value mutual funds underperform value index funds by more than active growth mutual funds underperform their index counterparts. While there are pockets of outperformance among individual and activist value investors, the overall conclusion that we reach is that active value investing does not deliver on its promise. We close the session by looking at possible reasons for this gap between promise and practice.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session16.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session16test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session16soln.pdf

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Session 3: The Risk Free Rate

Thu, 07 May 2026 03:07:00 -0000

Sets up the requirements for a rate to be risk free and the estimation challenges in estimating that rate in different currencies.

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Session 19 (of 42): Growth Investing - Growth at a Reasonable Price (GARP)

Wed, 06 May 2026 21:07:00 -0000

In this session, we look at screening stocks to find stocks where growth is being priced too low by markets. We first look at earnings growth screens, where you pick stocks that have either high past earnings growth or high earnings growth expected in the future, and note that neither screen has done well in delivering returns. We then focus on investing in high PE ratio stocks, a strategy that has done badly over long time periods, but that does offer high returns in sub-periods. Finally, we look at screens that incorporate both PE and growth, either by looking for companies that trade at PE ratios that are less than their expected growth rates, or by looking for companies that trade at low ratios of PE to growth rates (PEG ratios).
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session18.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session18test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session18soln.pdf

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Session 5: Betas (Relative Risk Measures)

Wed, 06 May 2026 15:07:00 -0000

Describes what a beta tries to measure and after critiquing the standard regression approach to beta estimation, I develop an approach for estimating betas for individual companies.

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Session 20 (of 42): Activist Growth Investing - Be your own change agent!

Wed, 06 May 2026 09:07:00 -0000

In this session, we look at growth investing strategies where you not only invest in growth companies but also play a role in their growth. In particular, we focus on venture capital investing, by looking at the process by which a young, start-up negotiates with a venture capitalist and how the latter tries to profit from the investment. We also evaluate the failure risk that venture capitalists face, while investing in young companies, and the overall returns generated by venture capital investing over long time periods.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session20.pdf Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session20test.pdf Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session20soln.pdf

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Session 8: Estimating Growth

Wed, 06 May 2026 03:07:00 -0000

Looks at alternative approaches to estimating expected growth, including past growth and analyst estimates, as well as fundamental growth.

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Session 14 (of 42): Value Investing - The Contrarians

Tue, 05 May 2026 21:07:00 -0000

In this session, we look at buying stocks that have lost favor with the market, on the presumption that investors tend to over react to bad news. In particular, we look at two classes of contrarian investing. In the first, we examine the returns from buying the biggest losers in terms of stock prices over the previous year. While the overall evidence suggests that you can make significant returns from this strategy, we look at possible leakage from transactions costs and not having long enough time horizons. In the second, we evaluate whether you can generate positive returns from buying badly managed or poorly run companies, partly because the market has lowered expectations for these companies so much that it does not take much to beat these expectations.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session14.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session14test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session14soln.pdf

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Session 4: Equity Risk Premiums

Tue, 05 May 2026 15:07:00 -0000

Contrasts different approaches for estimating equity risk premiums in mature markets and extends these approaches to emerging markets and then to individual companies.

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Session 11 (of 42): Technical Analysis

Tue, 05 May 2026 09:07:00 -0000

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Session 6: Cost of Debt and Capital

Tue, 05 May 2026 03:07:00 -0000

Defines debt and cost of debt and then uses those measures to arrive at the cost of capital for a company.

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Session 17 (of 42): Investing on Hope - Introduction to Growth Investing

Mon, 04 May 2026 21:07:00 -0000

In this session, we set the table for growth investing as a philosophy by defining growth investing as an approach based upon the presumption that markets misprice growth assets more than assets in place. With this definition in place, we categorize growth investing into four groups: investing in small market cap companies, investing in initial public offerings, screening for growth at a reasonable price (GARP) and activist growth investing. We close the session by looking at the first of these four approaches, small cap investing, by first examining the empirical evidence on a small cap premium, then looking at the volatility of that premium over time periods and end by evaluating the reasons given for why the small cap premium may exist in the first place.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session17.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session17test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session17soln.pdf

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Session 2: Intrinsic Value - Foundation

Mon, 04 May 2026 15:07:00 -0000

Sets up the foundations of intrinsic valuation, with a contrast between valuing a business and valuing the equity in that business.

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Session 15 (of 42): Value Investing - The Activists

Mon, 04 May 2026 09:07:00 -0000

In this session, we look at activist value investing, where you not only buy cheap companies, but also provide the catalysts for prices to adjust to value. In particular, we examine the strategy of investing in poorly managed companies and changing their asset mix, capital structure, dividend policy and corporate governance with the intent of increasing value (and price) over time. We classify activist investors into three groups, lone wolves (individual investors), activist mutual funds and activist hedge funds/private equity investors and examine differences in how they approach investing.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session15.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session15test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session15soln.pdf

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Session 7: Estimating Cash Flows

Mon, 04 May 2026 03:07:00 -0000

Goes through the steps in estimating cash flows, from measuring earnings to computing reinvestment and then on to cash flows (to both the firm and to equity).

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Session 9 (of 42): Random Walks and Momentum

Sun, 03 May 2026 21:07:00 -0000

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Session 1: Introduction

Sun, 03 May 2026 15:07:00 -0000

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Session 21 (of 42): Growth Investing - Against the tide of history!

Sun, 03 May 2026 09:07:00 -0000

In this session, we wrap up our discussion of growth investing by looking at why some investors may choose to be growth investors, even though it has historically not delivered the types of return that value investing has. In particular, we note that investors who are good at timing macro or market-wide shifts in interest rates and earnings can also generate high returns from growth investing. We also present evidence that activity (collecting and processing information, doing research) has a much bigger payoff with growth stocks than with value stocks, perhaps because markets make bigger mistakes with growth stocks and investors are far more likely to give up on intrinsic valuation.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session21.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session21test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session21soln.pdf

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Session 30: Valuation - Cash Flows and Discount Rates

Sun, 03 May 2026 03:07:00 -0000

Look at the estimation process and challenges associated with estimating cash flows & discount rates in valuation

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Session 22 (of 42): Information Trading - Trade on the News

Sat, 02 May 2026 21:07:00 -0000

In this session, we introduce information trading (as a philosophy) by first delineating how efficient markets should respond to new information, as opposed to slow learning or over reacting markets. We then lay out different ways in which investors can play the information game: by getting a whiff of forthcoming information announcements (from private sources, rumors or research) and trading on that basis, by trading on the information announcement itself on the assumption that the immediate market reaction is likely to be skewed or investing after the announcement on the presumption that markets learn slowly or over react.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session22.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session22test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session22soln.pdf

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Session 29: Valuation - First Steps

Sat, 02 May 2026 15:07:00 -0000

Lay out different ways in which you can approach valuation and define the key drivers of value

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Session 24 (of 42): Information Trading - Following the Analysts

Sat, 02 May 2026 09:07:00 -0000

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Session 27: Dividend Policy - Action and Follow Up

Sat, 02 May 2026 03:07:00 -0000

Use the dividend assessment to make judgments on whether companies should return more or less cash than they are.

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Session 23 (of 42): Information Trading - Following the Insiders

Fri, 01 May 2026 21:07:00 -0000

In this session, we look at a strategy of following the insiders in a company, buying when they are buying and selling when they are, on the assumption that insiders know more about a company’s value than market participants. To evaluate whether this strategy works, we first look at whether insider trading is a good predictor of stock returns in subsequent time periods. While we do find that insider buying (selling) is followed by positive (negative) market returns, we also find that the signal is often wrong and that timely access to the insider trading information is critical. We also find insider trading is more predictive, if top executives are involved and at smaller companies. Finally, we conclude that we would generate far more lucrative payoffs if we had access to illegal insider trading information.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session23.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session23test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session23soln.pdf

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Session 26: Dividend Policy - Assessment

Fri, 01 May 2026 15:07:00 -0000

Evaluate how much companies can afford to return to stockholders & compare to actual cash returned

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Session 28 (of 42): Close Enough - Near Arbitrage

Fri, 01 May 2026 09:07:00 -0000

In this session, we look at near arbitrage, where you have two very similar (but not identical) assets trading at different prices at the same point in time or two identical assets that are mispriced with no guarantee that the price difference will close. In both cases, we argue that while you can create low-risk positions, it is impossible to create the riskless, guaranteed profit positions that characterize pure arbitrage. We look at three examples of near arbitrage: a stock that is listed and traded on different markets (either as a multiple listing or depository receipt), a closed end fund (with the possibility of liquidation or open ending) and convertible mispricing (where the stocks, bonds, convertible bonds and options on the same company are mispriced, relative to each other). With each of these, we argue that investors with sufficient capital and the power to force convergence can make excess returns.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session28.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session28test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session28soln.pdf

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Session 25: Divided Policy - The Trade Off

Fri, 01 May 2026 03:07:00 -0000

Look at the reasons, good and bad, why companies initiate and change dividends

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Session 26 (of 42): Information Trading - Other Announcements

Thu, 30 Apr 2026 21:07:00 -0000

In this session, we turn our attention to public announcements other than earnings. We begin by looking at acquisition announcements, establishing that the winners in acquisitions are clearly target company stockholders and that many acquisitions don’t work in delivering value to acquiring company stockholders either at the time of the announcement or in the years after. We look at investment strategies built around acquisitions, with the most lucrative one being the identification of potential target companies ahead of the acquisition announcements. We also look at stock splits, where the evidence of a price reaction is mixed, and dividend announcements, where increases (decreases) in dividends are accompanied by stock price increases (decreases), though the price effect has decreased over time.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session26.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session26test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session26soln.pdf

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Session 28: Dividend Policy - The End Game

Thu, 30 Apr 2026 15:07:00 -0000

Examine how companies end up with dysfunctional dividend policies & how they can change them

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Session 27 (of 42): Too Good to be True - Pure Arbitrage

Thu, 30 Apr 2026 09:07:00 -0000

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Session 23: The Right Type of Financing

Thu, 30 Apr 2026 03:07:00 -0000

Determine the right kind of financing for a company & evaluate existing financing to see if it matches up

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Session 33 (of 42): Market Timing - Valuing the Market

Wed, 29 Apr 2026 21:07:00 -0000

In this session, we look at extending valuation approaches developed for valuing individual stocks to valuing the entire market. We begin by using an intrinsic valuation model to value the S&P 500 as the present value of expected cash flows on the index. While the approach is promising, it is dependent upon historical data and can provide poor signals, if there has been a systematic shift in risk preferences or growth potential. We also look at valuing a market on a relative basis, by either comparing its pricing over time or by comparing pricing across markets.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session33.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session33test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session33soln.pdf

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Session 22: Moving to the Optimal Financing Mix

Wed, 29 Apr 2026 15:07:00 -0000

Examine whether & how quickly a firm that has too much or too little debt should move to its "right' mix

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Session 31 (of 42): Market Timing - Non-financial and technical indicators

Wed, 29 Apr 2026 09:07:00 -0000

In this session, we begin by classifying non-financial indicators that have been used to time markets into three groups: spurious indicators that are correlated the market but have no economic relationship, feel good indicators that try to measure investor optimism and often work better as contemporaneous rather than leading indicators of stock prices and hype indicators that attempt to measure the fad factor in stock prices, with the assumption that hype goes before a fall. With technical indicators, we note that past market price movements have generally not been good indicators of future movements but that trading volume and volatility shifts may provide more timing promise.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session31.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session31test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session31soln.pdf

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Session 21: Optimal Financing Mix V - Alternate Approaches

Wed, 29 Apr 2026 03:07:00 -0000

Look at the Adjusted Present Value (APV) approach as well as sector averages as guides to the optimal financing mix

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Session 30 (of 42): Market Timing - Setting the Table

Tue, 28 Apr 2026 21:07:00 -0000

In this session, we begin by arguing that all investors are market timers, insofar as they decide how much to invest and when to invest, with the difference being more of degree. The allure of market timing comes from the payoff that it delivers to those who are successful at it, since successful market timers will easily beat their counterparts in stock picking. The cost of market timing is that you may end up out of the market at exactly the wrong times (the periods where the market is going up).
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session30.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session30test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session30soln.pdf

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Session 19: Optimal Financing Mix III - Following up the Cost of Capital Approach

Tue, 28 Apr 2026 15:07:00 -0000

Evaluate why moving to the optimal financing mix benefits stockholders in a company & deal with concerns

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Session 32 (of 42): Market Timing - Mean Reversion and Macro Fundamentals

Tue, 28 Apr 2026 09:07:00 -0000

In this session, we begin by looking at market timing approaches that are built on the presumption that there is a normal level for a financial market and that prices revert back to this normal level. In the context of stocks, this usually takes the form of a normal PE, computed using either current or normalized earnings, with the assumption that if stocks collectively are trading at a PE higher (lower) than the normal PE, they are over (under) priced. With interest rates, the norm is defined as a range of interest rates based upon history and an assumption that interest rates will revert back to this range over time. In the second part of the session, we examine whether you can use macro economic data on interest rates and real growth to forecast future stock prices and find little basis for trading profits.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session32.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session32test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session32soln.pdf

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Session 24: Dividend Policy - Trends and Measures

Tue, 28 Apr 2026 03:07:00 -0000

Describe historical patterns/trends in dividend policy & look at measures of dividends paid

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Session 29 (of 42): Not riskless, not even close - Pseudo or Speculative Arbitrage

Mon, 27 Apr 2026 21:07:00 -0000

In this session, we focus on strategies that are often labeled as “arbitrage” but are really speculative, risky strategies that may or may not generate excess returns. First, we look at paired arbitrage, a practice of finding two companies that have historically moved together, where the current price relationship is not consistent with historic norms. While the strategy has made money for investors over time, the evidence suggests that the returns have come with risk and that the excess returns have faded over time. Second, we examine “merger arbitrage”, the practice of buying target company shares after a merger/acquisition is announced, hoping to make money from the price being higher when the deal is consummated. Again, while the returns are generally positive, it is exposed to the risk that the acquisition may fail, causing the stock price to drop back to pre-announcement levels. With speculative arbitrage strategies, we note the importance of adjusting borrowing (financial leverage) to reflect the risk in the strategy. We close the session by looking at hedge funds, noting three findings: that they have historically generated higher returns, given their risk exposures, than the rest of the market, that these higher returns come from a few big hedge fund winners (rather than from overall consistency) and that the worst hedge funds usually go out of business.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session29.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session29test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session29soln.pdf

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Session 20: Optimal Financing Mix IV - Wrapping up the Cost of Capital Approach

Mon, 27 Apr 2026 15:07:00 -0000

Extend the cost of capital approach to a diverse set of companies (cyclical, commodity, private) & examine determinants of the mix

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Session 34 (of 42): Market Timing - Does it work?

Mon, 27 Apr 2026 09:07:00 -0000

In this session, we look the track record of market timers. We begin with mutual funds and note that the cash holdings of mutual funds are implicit measures of market timing, increasing when funds are bearish and decreasing when they are bullish. We find little evidence of market timing ability either among mutual fund managers, in general, or even among just tactical asset allocation funds. The evidence is a little more positive for hedge funds, insofar as some of them are better at forecasting forthcoming changes in liquidity and adjusting their portfolios accordingly. Neither investment newsletter writers nor market strategists are investment banks seem to do well at timing markets. Notwithstanding this evidence, we look at four ways in which investors can bring market timing into their portfolios: through the asset allocation decision, by switching investment styles ahead of market shifts, by rotating through sectors as the economy evolves or by speculating using index options or futures.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session34.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session34test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session34soln.pdf

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Session 14: Investment Returns I- Setting the Table

Mon, 27 Apr 2026 03:07:00 -0000

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Session 36 (of 42): More on Investor Performance - Continuity and Consistency

Sun, 26 Apr 2026 21:07:00 -0000

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Session 17: Optimal Financing Mix I - The Trade Off

Sun, 26 Apr 2026 15:07:00 -0000

Look at the pluses & minuses of using debt, as opposed to equity

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Session 37 (of 42): Passive Investing Choices

Sun, 26 Apr 2026 09:07:00 -0000

In this session, we look at the choices available for investors who choose the passive investing route. The first option is to invest in index funds, which have grown in terms of both dollar value and variety over the last four decades. They offer the benefits of tracking indices (of whichever asset class you want) with very little cost. The second is to choose among an ever-increasing array of exchange-traded funds (ETF), which also try to mimic indices, but can be bought and sold like individual stocks. The third is to try to have your cake and eat it too, by investing in enhanced index funds that claim to offer the benefits of index funds (low costs and index integrity) while generating slightly higher returns (using derivatives or by over investing in the best stocks in the index).
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session37.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session37test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session37soln.pdf

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Session 18: Optimal Financing Mix II- The cost of capital approach

Sun, 26 Apr 2026 03:07:00 -0000

Describe the cost of capital approach to deriving the optimal financing mix for a company

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Session 38 (of 42): Alternative Investments

Sat, 25 Apr 2026 21:07:00 -0000

In this session, we look at asset classes and invstments that fall outside the standard template. These alternative investments include private equity and venture capital, which we have allocated to other sessions, but also include non-traded real estate, gold, crypto and collectibles. While they may not work or are dangerous to hold as stand-alone investments, they can be added to a portfolio of primarily financial assets (stocks and bonds) to good effect.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session38.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session38Ntest.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session38Nsoln.pdf

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Session 16: Investment Returns III - Wrapping up Loose Ends

Sat, 25 Apr 2026 15:07:00 -0000

Look at the effects of currency choices on investment analysis & examine how best to deal with uncertainty in analysis

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Session 39 (of 42): Collectibles!

Sat, 25 Apr 2026 09:07:00 -0000

In this session, we focus exclusively on collectibles, an investment class that can only be priced, not valued, starting with gold, the longest standing collectible of all, before turning to crypto and other collectibles.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session39.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session39Ntest.pdf Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session39Nsoln.pdf

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Session 15: Investment Returns II - Getting to Time Weighted Cash Flows

Sat, 25 Apr 2026 03:07:00 -0000

Go from earnings to cash flows to incremental time-weighted cash flow based measures of return.

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Session 40 (of 42): Bitcoin and Crypto

Fri, 24 Apr 2026 21:07:00 -0000

In this session, we look at bitcoin specifically, an investment that has captured public imagination, with its soaring price and look at whether it belongs in investment portfolios and if yes, in what form.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session40.pdf Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session40Ntest.pdf Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session40Nsoln.pdf

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Session 13: Estimating Hurdle Rates- Financing Weights and Cost of Capital

Fri, 24 Apr 2026 15:07:00 -0000

Determine the weights to use in estimating a cost of capital & how it differs from a cost of equity

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Session 41 (of 42): The Promise and Peril of Alternatives!

Fri, 24 Apr 2026 09:07:00 -0000

In this session, we look at why alternative investments have not delivered their promised benefits to the institutional investors who have bought into their allure, and examine what's coming next.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session41.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session41Ntest.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session41Nsoln.pdf

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Session 12: Estimating Hurdle Rates - Debt and its Cost

Fri, 24 Apr 2026 03:07:00 -0000

Define what goes into debt and what it costs to borrow money

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Session 42 (of 42): The Grand Finale

Thu, 23 Apr 2026 21:07:00 -0000

In this session, we close by looking at the process of finding the best investment philosophy for you, as an investor. To make this choice, you have to begin with a personal assessment (patience, your need to be part of a group, age) and follow up with a financial assessment (job security, funds to invest, tax status). You then have to follow up by developing a sense and understanding of how markets works (and do not) based upon both the evidence and your own investment experiences. At the end of the process, you can end up with the either an investment philosophy that best fits you or a collection of philosophies that complement each other.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session42.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session42Ntest.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session42Nsoln.pdf

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Session 10: Estimating Hurdle Rates - Bottom up Betas

Thu, 23 Apr 2026 15:07:00 -0000

Estimate beta for a company, starting with its business breakdown and building up.

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Session 7 (of 42): Market Efficiency I - Laying the Groundwork

Thu, 23 Apr 2026 09:07:00 -0000

Our beliefs about market efficiency and inefficiency determine how we invest. In this session, we look at what an efficient market is and note that market efficiency does not preclude market mistakes (price can be different from value) or investors beating the market (though they tend to be few and far between). We also look at the requirements for a market to be efficient: liquidity in markets and traders/investors who are trying to exploit the inefficiencies. Finally, we eke out the implications: markets are likely to be less efficient if trading costs and trading frictions are high and value-seeking investors are few and far between. While most markets are efficient for most people at most points in time, there are pockets of inefficiency that we can be exploited in investing.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session7.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session7test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session7soln.pdf

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Session 11: Estimating Hurdle Rates - More on bottom up betas

Thu, 23 Apr 2026 03:07:00 -0000

Examine how to estimate betas for emerging market companies and private businesses.

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Session 6 (of 42): Trading Costs and Taxes

Wed, 22 Apr 2026 21:07:00 -0000

When you trade, you incur costs and these costs can be a drag on your investment returns. In this session, we look past the brokerage costs of trading to bring in the larger costs: the bid-ask spread, the price impact and the opportunity cost of waiting. These costs not only vary across companies and time, but they can vary across strategies. In the last part of the session, we look at how much of an investor’s returns are consumed by taxes and note that more trading generally leads to larger tax liabilities.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session6.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session6test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session6soln.pdf

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Session 9: Estimating Hurdle Rates - Betas and Fundamentals

Wed, 22 Apr 2026 15:07:00 -0000

Examine the determinants of betas

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Session 8 (of 42): Market Efficient II - Testing market-beating schemes and strategies

Wed, 22 Apr 2026 09:07:00 -0000

As investors, we are easy prey for the sales pitches from firms trying to sell us the next “magic bullet” for investing success. In this session, we look at three ways to test whether these strategies that claim to beat the market work. In the first, an event study, we look at a news announcement (that we think affects stock prices) and collect the stock prices of the companies affected by this announcement. If these returns are higher than expected (after adjusting for risk and market performance), the event may be worth building an investment strategy around. In the second, the portfolio approach, we test to see whether companies that share a common characteristic (small market capitalization, low price to book ratio etc.) are better investments than the rest of the market. In the third approach, we use multiple regressions to eke out the variables that drive stock returns and try to make money of them.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session8.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session8test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session8soln.pdf

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Session 8: Estimating Hurdle Rates - Regression Betas

Wed, 22 Apr 2026 03:07:00 -0000

Look at how a regression of stock against market returns can help us understanding stock price performance and risk.

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Session 18 (of 42): Get in on the ground floor - The IPO Story

Tue, 21 Apr 2026 21:07:00 -0000

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Session 7: Estimating Hurdle Rates - Implied ERP, Country Risk and Company Risk

Tue, 21 Apr 2026 15:07:00 -0000

Estimate a forward-looking, dynamic equity risk premium and extend risk premium estimation to countries and companies.

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Session 10 (of 42): Temporal Price Patterns

Tue, 21 Apr 2026 09:07:00 -0000

In addition to exhibiting correlation across time, stock prices seem to also follow patterns in calendar time. In this session, we look at two of the most commonly noted calendar time phenomena in stock prices. The first is the January effect, where stocks have done much better in January than in any other month of the year. While the January effect is commonly attributed to tax loss selling (at the end of the previous year) and institutional rebalancing, the most interesting feature of the January effect is that it is primarily attributable to the smallest firms in the market, with about half of the so-called small cap premium being earned in the first two weeks of the calendar year. The second effect is the weekend effect, where Mondays have historically been the worst day of the week to invest in stocks. This effect, though, seems to have weakened in the last two decades, with Fridays competing with Mondays for worst day-of-the-week honors.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session10.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session10test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session10soln.pdf

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Session 6: Estimating Hurdle Rates - Equity Risk Premiums - Historical and Survey

Tue, 21 Apr 2026 03:07:00 -0000

Assess the historical and survey estimates of equity risk premiums as predictors of the future risk premium

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Session 25 (of 42): Information Trading - Earnings Reports

Mon, 20 Apr 2026 21:07:00 -0000

In this session, we begin our discussion of trading based upon public information by looking at earnings reports. Since markets react to the news in earnings reports, we begin by categorizing that news into good, neutral and bad, by comparing the actual earnings to the predicted earnings. Not only do we see a price change that is consistent with the nature and magnitude of the surprise (positive price changes on positive surprises) but we also see two other phenomena. The first is that prices start to drift in the direction of the surprise even before the earnings report is made public (suggesting that someone is trading illegally ahead of the report) and that they continue to drift in the same direction after the report comes out (suggesting a slow learning market). We also look at earnings reports that are delayed and find that they are more likely to contain bad news. Finally, we look at the speed of price reaction on the day of the report and find that prices adjust quickly to earnings surprises, suggesting that any investment strategy built around earnings surprises has to be built around speedy trading/execution.
Playlist for class (Intro + 42 sessions): https://youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session25.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session25test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session25soln.pdf

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