Thesis Defense - Mert Ata Yıldırım (FERM)

STEEPENING VERSUS FLATTENING YIELD CURVES: IMPLICATIONS FOR WACC CALCULATION AND COMPANY VALUATION

Mert Ata Yıldırım, M.Sc. Financial Engineering

Date:  Thursday, January 16, 2021

Time:  17:00

Location:  This meeting will be held ONLINE.

Please send an e-mail to ulku.koknel@ozyegin.edu.tr and bahar.hisim@ozyegin.edu.tr in order to participate in this thesis defense. 

Thesis Committee:

Dr. Özlem Akın, Advisor, Özyeğin University

Dr. Cansu İskenderoğlu Şahin, Özyeğin University

Dr. Erkan Yönder, Concordia University 

Abstract:

Recent survey conducted by Pinto et al. (2019) shows that Income Approach is one of the most preferred approaches by valuation practitioners. Weighted Average Cost of Capital (WACC) is used as the discount factor of future cash flows of the company in this approach and constant risk-free rate is one of the major assumptions in WACC calculation. However; it is not valid in inverted yield curve conditions. Inverted yield curves can be observed in both developed and emerging economies. This paper compares the valuation results computed with Changing WACC and Stable WACC and the results show that Changing WACC provides estimates closer to market price in inverted yield curve conditions. 

Bio:

Mert Ata Yıldırım received the B. A. in  Business Administration, Özyeğin University, İstanbul, Turkey in February 2017. He is pursuing a M.Sc. in Financial Engineering at Özyeğin University under the supervision of Dr. Özlem Akın. He currently works as Valuation, Modelling & Economics Senior Associate at Ernst and Young.