EQUITIES AND EQUITY-LINKED BONDS
Purpose: Technical analysis of equity market structure, equity pricing models and equity derivatives.
Target Participant: Equity analysts or sales staff, corporate finance, institutional sales staff.
9:00 – 10:30 ² Introduction to Equity Markets
Structure and link of global equity markets
Price quotation system
Buy/sell orders
P/E ratios
Dividend payments
² Pricing Models
Dividend discount model
Capital asset pricing model
Influence of risk adjustments
Understanding the firm's beta
Influence of capital structure:
the debt/equity decision
optimizing shareholder value
10:30 – 10:45 Break
10:45 – 12:30 ² Working with Financial Ratios
Goals of industry comparisons and trend analysis
Appraise the position of a business
Identify trouble spots that need attention
Make projections and forecasts about the course of future operations
Liquidity ratios: current ratio, acid test
Asset utilization ratios: receivables and inventory turnover, average collection, average age, operating cycle
Solvency ratios: debt, debt/equity ratio, time interest earned
Profitability ratios: gross profit margin, ROI, ROE
Market value ratios: EPS, P/E, Price/book value
12:30 – 1:30 Lunch
1:30 – 3:30 ² Survey of Equity–Linked Debt
Convertible bonds: conversion ratios and premiums, pricing parameters, breakeven analysis
LYONs: discounted convertibles, pricing parameters, breakeven analysis
3:30 – 3:45 Break
3:45 – 5:00 ² Equity Warrants
Definition and operations of warrants
Option pricing models: implied volatility
Stripped pricing of warrants
Breakeven analysis