ABSTRACT

The book provides a rigorous introduction to corporate finance and the valuation of equity. The first half of the book covers much of the received theory in these areas such as the relationship between the risk of an equity security and the return one can expect from it, the effects of leverage (that is, the borrowing policies of the firm) on the return one can expect from the firm’s shares and the role that dividends, operating cash flows and accounting earnings play in the valuation of equity. The second half of the book is more advanced and deals with the important role that "real options" (that is, as yet unexploited investment opportunities) play in the valuation of equity. 

chapter 1|7 pages

Introduction

chapter 3|25 pages

The relationship between return and risk

chapter 8|24 pages

Statistical foundations

First-order stochastic differential equations

chapter 9|29 pages

Statistical foundations

Systems of and higher-order stochastic differential equations

chapter 10|26 pages

Equity valuation

chapter 11|20 pages

Equity valuation

Non-linearities and scaling

chapter 12|32 pages

Equity valuation

Multivariate investment opportunity sets

chapter 13|20 pages

Equity valuation

Higher-order investment opportunity sets, momentum and acceleration