Chap007.ppt - Valuing Stocks This chapters introduces...

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7- 2 Valuing Stocks This chapters introduces valuations techniques for equity (stocks). The Dividend Discount Model 股利折现模型 provides an excellent measure of a stock’s intrinsic value 内在价值 .
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7- 3 The Stock Market The two principal stock exchanges in the US are the New York Stock Exchange & NASDAQ Primary Market 一级市场 vs. Secondary Market 二级市场 Initial Public Offering 首次公开发行 Primary Offering
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7- 4 Primary vs. Secondary Markets: Example Shannon sells 100 shares of Google stock from her portfolio for $500 per share to help pay for her son Domenic’s college education. How much does Google receive from the sale of its shares? Does this transaction occur on the primary or secondary market?
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7- 5 Bid Price/Ask Price Bid Price: The prices at which investors are willing to buy shares. Ask Price: The prices at which current shareholders are willing to sell their shares. Example: If an investor wishes to purchase 100 shares of Apple with a bid price of $253.40 and an ask price of $253.48, how much could the investor expect to pay for the shares?
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7- 6 Answer: $253.48
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7- 7 Terminology Investors use a number of methods to determine the quality of a company’s shares . Market Cap 总市值 P/E Ratio 市盈率 Dividend Yield 股利收益率
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7- 8 Basic Terminology: Example You are considering investing in a firm whose shares are currently selling for $50 per share with 1,000,000 shares outstanding. Expected dividends are $2/share and earnings are $6/share. What is the firm’s Market Cap? P/E Ratio? Dividend Yield?
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7- 9 Basic Terminology: Example You are considering investing in a firm whose shares are currently selling for $50 per share with 1,000,000 shares outstanding. Expected dividends are $2/share and earnings are $6/share. What is the firm’s Market Cap? P/E Ratio? Dividend Yield? Market Capitalization $50 1,000,000 $50,000,000 $50 P/E Ratio 8.33 $6 $2 Dividend Yield .04 4% $50
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7- 10 Measures of Value Three ways to value a firm: Book Value 账面价值 – Net worth 净值 of the firm according to the balance sheet. Liquidation Value 清算价值 – Net proceeds that could be realized by selling the firm’s assets and paying off its creditors.
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