Financial Instruments Valuation (Issue 01)
- Financial Instruments Valuation
- Market Data
- Market Highlights
- Appendix
There are a wide variety of financial instruments, each with their own unique characteristics. For instance, stocks represent company ownership, whereas bonds are debt instruments that pay a fixed rate of interest. The value of derivatives such as options and futures are derived from underlying assets or indices. Companies utilise financial instruments across the entire spectrum to mitigate financial risks and maximise returns. However, these instruments must be reasonable valued and reported in financial statements to provide investors and other stakeholders with reliable information. This newsletter aims to discuss the challenges in valuing financial instruments.
Determination of DLOM (Issue 02)
- Determination of DLOM Using Option Pricing Models
- Market Data
- Market Highlights
- Appendix
The discount for lack of marketability (“DLOM”) reflects the difference in value between a marketable subject versus a non-marketable subject. The difference in value can be explained with the required time for marketing or any selling limitations. According to International Valuation Standards (“IVS”) 105, DLOMs may be quantified using any reasonable method, but are typically calculated using option pricing models, studies that compare the value of publicly-traded shares and restricted shares in the same company, or studies that compare the value of shares in a company before and after an initial public offering. This newsletter aims to discuss these methods.
- Contributory Asset Charges
- Market Data
- Market Highlights
- Appendix
Determining the contributory asset charges is a key work step when adopting the multi-period excess earnings method (“MEEM”) when valuing intangible asset. These contributory assets are utilised to generate potential cash flows of the said intangible assets where independent cash flows cannot be generated by the intangible asset alone. This newsletter aims to discuss about the different methods of estimating contributory asset charges.
- Estimating Expected Life of Employee Share Option for Financial Reporting Valuation
- Market Highlights
This newsletter aims to discuss about the significance and factors that should be considered when estimating the expected life of the employee share options.