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econ423courseobjectives11 - these equations o Derive the...

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Course Objectives Chapter 11 Econ 423 - Financial Markets Lauren Heller, Summer 2009 Chapter 11: The Stock Market Objectives – By the end of this chapter, you should be able to: o Define both common and preferred stock, and be able to cite the ways in which stock shares are different from and similar to other types of capital market securities. o Explain the mechanisms by which shares of stock are sold, both in terms of initial public offerings and trading on the secondary market. o Compute stock prices and returns using all four valuation methods discussed in class, which include: A Single Period Valuation Model A Generalized Dividend Valuation Model The Gordon Growth Model The Price Earnings Valuation Method. You should also be able to solve for any other variable described in valuation models (dividend growth, expected future prices, etc.) when given the remaining variables of
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Unformatted text preview: these equations. o Derive the Gordon Growth model algebraically, using the generalized dividend valuation model as a starting point. o Outline the ways in which stock prices are set in a competitive market with diverse investor valuations. o Identify common problems encountered in valuing stocks, especially with respect to estimates of risk and future dividend growth. o Explain the role of stock market indices and American depository receipts in both domestic and foreign stock markets. o Outline the structure of the Securities and Exchange commission and its current role in stock market regulation. • Assigned Reading - Mishkin and Eakins, pp. 259-276 • Optional Practice Problems o Mishkin and Eakins, pp. 277-279: • Questions: #1-3, 5 • Quantitative Problems: #2, 3, 5, 7-8, 10, 12, 17 • Web Exercises: #1...
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