Lenders often use the debt service coverage ratio (DSCR) and the loan-to-value (LTV) ratio to determine the maximum loan amount on a specific property. …
Cost Comparison Approach Estimate the market value of the land. The value of the land is estimated separately, often using the …
In the direct capitalization approach to property valuation, we discount or “capitalize” first year NOI by the capitalization rate. NOI …
We can apply binomial trees to calculate the value of options. Options generate tree paths by the 2 states that …
The BSM model allows us to value options continuously in real time, as long as the no-arbitrage condition holds. The …
The change in price of a bond when it experiences a change in credit rating is dependent on the modified …
The forward pricing model states that two investors should be indifferent between paying P for a j+k year zero coupon, …
We can derive spot rates from the par rate curve through a process called bootstrapping. Bootstrapping is in iterative process …
Expected exposure is the amount a investor stands to lose on risky bond before recovery amounts are taken into consideration. …
In free cash flow valuation models, we have a control perspective that assumers value recognition will be immediate. DDM models …