Posts by Andrew Stotz

The Gordon growth model, or GGM, is used to calculate the intrinsic value of a stock from future dividends. The model only works for companies that pay out dividends, which have a constant growth rate.

Modern Portfolio Theory is a theory presented in 1952 by Harry Markowitz on how risk-averse investors can create portfolios to maximize the return on investments based on the optimal levels of risk.

Stock valuation is the process of determining the current (or projected) worth of a stock at a given time period. There are 2 main ways to value stocks: absolute and relative valuation.

Capital budgeting is a process that helps determine whether a firm should invest in something or not. When businesses want to buy new long term assets such as new machinery or start a new project, it is imperative to consider if it would be worth it or not.

The optimal capital structure of a firm is the right combination of equity and debt financing. It allows the firm to have a minimum cost of capital while having the maximum market value.