IM Chapter 8 Stock Valuation

IM Chapter 8 Stock Valuation - Chapter 8 STOCK VALUATION...

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Chapter 8 STOCK VALUATION SLIDES 8.1 Key Concepts and Skills 8.2 Chapter Outline 8.3 Cash Flows for Stockholders 8.4 One-Period Example 8.5 Two-Period Example 8.6 Three-Period Example 8.7 Developing The Model 8.8 Estimating Dividends: Special Cases 8.9 Zero Growth 8.10 Dividend Growth Model 8.11 DGM – Example 1 8.12 DGM – Example 2 8.13 Stock Price Sensitivity to Dividend Growth, g 8.14 Stock Price Sensitivity to Required Return, R 8.15 Example 8.3 Gordon Growth Company – I 8.16 Example 8.3 Gordon Growth Company – II 8.17 Nonconstant Growth Problem Statement 8.18 Nonconstant Growth – Example Solution 8.19 Quick Quiz – Part I 8.20 Using the DGM to Find R 8.21 Finding the Required Return – Example 8.22 Table 8.1 – Summary of Stock Valuation 8.23 Features of Common Stock 8.24 Dividend Characteristics 8.25 Features of Preferred Stock 8.26 Stock Market 8.27 NASDAQ 8.28 Work the Web Example 8.29 Reading Stock Quotes 8.30 Quick Quiz – Part II
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A-97 CHAPTER 8 CHAPTER WEB SITES Section Web Address 8.1 www.dividenddiscountmodel.com 8.2 http://www.calpers-governance.org/forumhome.asp www.irs.gov 8.3 www.bloomberg.com www.nyse.com www.nasdaq.com www.island.com finance.yahoo.com End of Chapter Material www.mhhe.com/edumarketinsight CHAPTER ORGANIZATION 8.1 Common Stock Valuation Cash Flows Some Special Cases Components of the Required Return 8.2 Some Features of Common and Preferred Stocks Common Stock Features Preferred Stock Features 8.3 The Stock Markets Dealers and Brokers Organization of the NYSE Nasdaq Operations Stock Market Reporting 8.4 Summary and Conclusions ANNOTATED CHAPTER OUTLINE Slide 8.1 Key Concepts and Skills Slide 8.2 Chapter Outline 8.1. Common Stock Valuation .A Cash Flows Stock valuation is more difficult than bond valuation because the cash flows are uncertain, the life is forever and the required rate of return is unobservable.
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CHAPTER 8 A-98 The cash flows to stockholders consist of dividends plus a future sale price. You can illustrate that the current stock price is ultimately the present value of all expected future dividends: P 0 = D 1 /(1+R) + D 2 /(1+R) 2 + D 3 /(1+R) 3 + … Slide 8.3 Cash Flows for Stockholders Slide 8.4 One-Period Example Slide 8.5 Two-Period Example Slide 8.6 Three-Period Example Slide 8.7 Developing The Model Ethics Note, page 235: The importance of the components of the valuation model is brought into sharp focus in a discussion of pension funding decisions. Pension and Investments reports that in November, 1993 the Securities and Exchange Commission issued a “new, unprecedented warning …to use only ‘high-grade’ market rates for discounting” for valuing pension assets. The article reports that many over-funded plans could “slip into underfunded status.” A practical result of the use of inappropriate return estimates is found in the case of Witco Chemical, which took large charges against earnings in 1993 related to its use of an inappropriate rate for computing its unfunded pension liability. Students might first be asked to guess how one determines an
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IM Chapter 8 Stock Valuation - Chapter 8 STOCK VALUATION...

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