Finance 135 Notes 1-27

Finance 135 Notes 1-27 - 15:47:00 Question on a stock gain...

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05/05/2010 15:47:00 Exam #1 Review Question on a stock gain. Question on stocks Question on debt and/or equity securities. What do we mean by liquidity. Question on Bonds. Type of liquid investments. Question on commercial paper Direct vs. indirect investment. Question on stock offering Question on Bull markets. Question on a stock purchase. Problem on a stock purchase. Question on short selling. ditto Question on DJIA Question on an annuity. Time value problem. Question on holding period return.
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Calculating expected return on a stock. Determining PV of an income stream. Question about stock risk. Question about Warren Buffett. ditto. Question about Ben Graham. Question about Warren Buffett. Question about Ben Graham. Question about Ben Graham’s “successful investor.” Question about Warren Buffett. Calculate the return on a portfolio. Question on correlation. Question on market return. Question on market returns. Calculating book value. Question on market efficiency. Question on DuPont analysis. Question on stock valuation. Calculate estimated share price. Calculate dividend payout ratio. Question on the IRR. Question on the P/E approach to stock valuation.
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05/05/2010 15:47:00 Finance 135
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1-27 ROE=ROI Warren Buffet= 15% ROE Look up Value line investment Summary tell ROE = Warren Buffet called moat= franchise product movement along curve= change in price shift of curve- change in demand ” Warren Buffet Key Factors: Return, Risk, Taxes
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1. Investment - the commitment of money or capital to purchase financial instruments or other assets in order to gain profitable returns in form of interest , income , or appreciation of the value of the instrument. 2. Relationship between utility and consumption - There is a close relationship between the marginal utility and price of a commodity.The additional satisfaction from the consumption of an additional unit of the commodity is called marginal utilty. Price means the value of the goods expressed in the terms of money.Price of all units of he same goods of consumption are more or less identical.It means that the consumer pays the same price for all the units of the same goods of consumption. But marginal utility of the goods of consumption start diminishing as the consumer increase the units of consumption of the commodity.Therefore the consumer will like to pay that price for the commodity,which is equal to the marginal utility he gets from the commodity.If the price of the commodity are higher than the marginal utility he derives from the commodity he will not like to purchase the commodity. In this way there is a clod\se relation between the marginal utility and the price of the
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