To demonstrate “fair” values for equity issues, I’ll elaborate on techniques in credit analysis to identify illustrate the relationships between bond yields and equity yields.

Components

• Credit Analysis: franchise power (reputation), capital (leverage), earnings power
• Yield to Maturity: market price, coupon, term to maturity (and here, sketch relative yields for different credit classes & characteristics of each class)

Financial Risk Profile Assessment
(per Standard and Poor’s)

Default Probability
(per HomeProtect.uk)