valuation of emerging market companies

whooooaaaa…just skimmed this for the first time this morning. i plan on becoming familiary with the real/nominal calculations, but not memorizing this ridiculous 7-9 step calculation. anyone doing the same or are you going to committ the process to memory?

exactly. it’s quite possibly the scariest little section of the whole L2 text. will i know it all step by step? doubt it. i have made notecards on the following stuff though- 1. free cash flow formula/calcs- this overlaps SS12 anyways, need to know 2. (1+nominal WACC) = (1+real WACC) ( 1+inflation) 3. real and nominal continuing value formulas 4. basic knowledge about ratios- in general, ratios based on real terms are accurate, nominal tend to get messed up. does say that net working capital/revenues wind up same ratio using both methods, there was a concept schwes’ concept checker that reinforced this ratio stuff. 5. adjust cash flows rather than discount rate to account for emerging mkt risks (know also the reasons why- country risks are diversifiable, etc) 6. cost of capital for emerging mkt countries- just looking at the WACC formula and learning some of the adjustments that an analyst should make like RFR using the 10 yr us govt bond yield + (local inflation - US inflation). those are my basic takeaways- keep nominal with nominal, keep real with real… as for the MASSIVE 7 page jobby, i cannot imagine that an item set would make you do that all out. i certainly hope not because i will poke my eye out with my mechanical pencil and freak out in the test center if it happens. as we study, if anyone sees good questions on this stuff in qbank or wherever, we should review it. i think WHOOOOOAAAAA is the general consensus on this LOS though. i’m right there with you.

nice, glad to hear. this is why i post on this forum. i agree, if anyone comes across good questions in their review, please try to remember to share them

This is one of the worst parts of L2.

I just got to this part and all I can say is - WOW. The good news is that it would be really tough to ask us to do anything like the example on exam day… there’s no way there would be enough time to work all that out. I’m with banni on this one - I’m going to try and keep it high level and just learn the key points. Great summary too, thanks. Edit: Has anyone tried any of the q-bank questions on this? If so, how bad are those?

I am keeping this for review at the end of my study which concludes on April 15th. I will spend not more than 2 days doing eoc problems+cfai problems and Schweser q-bank Then to keep my fingers crossed that this nasty thing does not show up at length on June 6th.