Valuation is at the heart of every investment decision, whether that decision is to buy, sell, or hold. But the pricing of any financial asset has become a more complex task in modern financial markets. Now completely revised and fully updated to reflect changing market conditions, Investment Valuation, Second Edition, provides expert instruction on how to value virtually any type of asset-stocks, bonds, options, futures, real assets, and much more.

Noted valuation authority and acclaimed NYU finance professor Aswath Damodaran uses real-world examples and the most current valuation tools, as he guides you through the theory and application of valuation models and highlights their strengths and weaknesses.

Expanded coverage addresses:

• Valuation of unconventional assets, financial service firms, start-ups, private companies, dot-coms, and many other traditionally valued assets
• Risk in foreign countries and how best to deal with it
• Using real option theory and option pricing models in valuing business and equity
• The models used to value different types of assets and the elements of these models
• How to choose the right model for any given asset valuation scenario
• Online real-time valuations that are continually updated at www.damodaran.com

A perfect guide for those who need to know more about the tricky business of valuation, Investment Valuation, Second Edition, will be a valuable asset for anyone learning about this critical part of the investment process.

• Introduction to Valuation
• Approaches to Valuation
• Understanding Financial Statements
• The Basics of Risk
• Option Pricing Theory and Models
• Market Efficiency-Definition, Tests, and Evidence
• Riskless Rates and Risk Premiums
• Estimating Risk Parameters and Costs of Financing
• Measuring Earnings
• From Earnings to Cash Flows
• Estimating Growth
• Closure in Valuation: Estimating Terminal Value
• Dividend Discount Models
• Free Cash Flow to Equity Discount Models
• Firm Valuation: Cost of Capital and Adjusted Present Value Approaches
• Estimating Equity Value per Share
• Fundamental Principles of Relative Valuation
• Earnings Multiples
• Book Value Multiples
• Revenue Multiples and Sector-Specific Multiples
• Valuing Financial Service Firms
• Valuing Firms with Negative Earnings
• Valuing Young or Start-Up Firms
• Valuing Private Firms
• Acquisitions and Takeovers
• Valuing Real Estate
• Valuing Other Assets
• The Option to Delay and Valuation Implications
• The Options to Expand and to Abandon: Valuation Implications
• Valuing Equity in Distressed Firms
• Value Enhancement: A Discounted Cash Flow Valuation Framework
• Value Enhancement: Economic Value Added, Cash Flow Return on Investment, and Other Tools
• Valuing Bonds
• Valuing Futures and Forward Contracts
• Overview and Conclusion