Now that you have nearly completed Financial Management, it's time to put it all together. This outstanding Google Talk on valuation of companies and related is by Aswath Damodaran, a Finance Professor at New York University (NYU).The tools and practice of valuation is intimidating to most laymen, who assume that they do not have the skills and the capability to value companies. In this talk, I propose to lay out four simple propositions about valuation. The first is that valuation is not an extension of accounting, insofar as it is not about recording the past but forecasting the future. The second is that valuation is not just modeling, where people put numbers into Excel spreadsheets and pump out values. A good valuation requires a narrative that binds the numbers together. The third is that valuing an asset or business is very different from pricing that asset or business, a difference that is often blurred in practice. The fourth is that luck plays a disproportionate role in whether you make money off your valuations. Put differently, you can do everything right and still walk away with nothing or worse at the end.Aswath Damodaran: "Valuation: Four Lessons to Take Away" | Talks at Google (1:01:29)Video not loading? Watch on YouTube.For this discussion, please watch the Google Talk on Valuation featuring Aswath Damodoran, Professor of Finance at NYU.Share with your classmates two things that surprised you about Aswath's presentation. Was there anything learned that you intend to apply to your work or use in the future?PLEASE USE THE STUDENT'S PERSPECTIVE TO FINISH THIS DISCUSSION. THANK YOU!

OverviewThe final project for this course is the creation of a portfolio. You are to solve all problems using the Excel spreadsheet. You will select two stocks, two bonds, an equity index (S & P 500, Russell 1000, Wilshire 5000, etc.) and a risk-free asset (Treasury bill, note, or bond) of your choice. The securities should be those of wellknown companies with investment grade bonds and high-quality, blue chip stocks. As you know, the risk-free asset is a Treasury security. The quality of the companies would make it easier for you to find the financial data/information. You will solve all the problems outlined in the Main Elements section using an Excel spreadsheet. Main Elements Create a portfolio for two stocks, two bonds, an equity index (S & P 500, Russell 1000, Wilshire 5000, etc.) and a risk-free asset (Treasury bill, note, or bond) of your choice. Complete the following sections in the portfolio: 1. Calculate the bond price and yield-to-maturity for the fixed-income securities. 2. Calculate the bond duration and convexity for the fixed-income securities. Briefly explain your findings from a risk/return perspective. 3. Create a two-asset risky opportunity set, risky asset, and risk-free asset portfolio. Calculate the standard deviation and expected return for the risky asset portfolio. Graph the optimal risky portfolio, the capital allocation line, and the optimal complete portfolio standard deviation and expected return. What are findings regarding the risk/return relationship?4. Compile the monthly returns (five years) for one of the stocks and the noted index. Calculate the estimated static CAPM for the period and forecast each asset’s expected return in the upcoming month. Explain the variation between the assets 5. Access pricing simulation spreadsheets online (link in the Excel Modeling in Investments text). Create one problem using various strategies in the simulation program. What did you learn from the simulation program on how to solve a trading problem? What is the goal of creating trading simulations using the spreadsheets? 6. Construct an equally weighted portfolio using the two stocks. Calculate the standard deviation for the portfolio. Select 15 quality stocks of your choice to add to the portfolio. Increase the assets in your portfolio with the 15 stocks by adding one at a time. Select three international stocks and add them to the portfolio. What are your observations regarding portfolio risk (standard deviation) for each stock added to the portfolio? Briefly explain. 7. Select one of the stocks paying a dividend. Determine the consensus estimate for dividend growth over the next five years. Estimate the infinite or stable dividend growth for the second stage. Estimate the firm’s cost of equity capital. Construct a two-stage dividend discount model in Excel. Calculate the firm’s stock price. 8. Select a stock option of one of your stocks. Calculate and graph the option payoff and profit using the Excel spreadsheet. 9. Create option trading strategies with charts using one of the stocks and a related option. Create a spread using a combination of calls and puts of a specific stock. 10. Select one of your stocks to calculate the option price using the Binomial Option Pricing Model (single and multi-period). Calculate the price using the Black-Scholes Option Pricing Model.