Net Present Value = Cash flow / (1+i)^t - initial investment
Weighted average cost of capital = %debt * cost of debt (interest rate) + % equity * cost of equity (computed using the CAPM formula)
Capital asset pricing model = Rf + b *(Rm-Rf) or the expected risk free rate (30 year bond rate + beta of stock * (expected market return - expected risk free rate).
Time Value of money - compounding and discounting based on timing of cash flows and required returns
Today's dollars * (1 + rate of return)^t = FV
What is the market paying for similar business?
DCF Discounted cash flow models
DDM Dividend Discount Models
Investors should prefer companies with increasing demand for the products and services (fundamental analysis) as well as the stock of the corporation (technical analysis)
Fundamental analysis requires financial ratios to be computed from financial statements and examining trends over time.
Technical analysis uses statistical processes to determine short term reversion to the mean as well as support and resistance levels.
Fundamental investors are often ling term investors.
Technical investors are often short term investors.
Focused Investors marry the two concepts and use them in conjunction.