Principles of Finance_Biederman_Final Study Guide

Principles of Finance_Biederman_Final Study Guide -...

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Dividends: Cash and Stock (stock splits) Equity securities - Stock denotes ownership (Common stock) - Bonds-no ownership. Simply a loan Common stocks - Residual claimants (can have any part of whatever is left—usually zero) - Par value on stock= meaningless Order: 1. Declaration date 2. Holder of record 3. Ex dividend 4. Payment Date Stock dividend- get paid in stock Stock split- issuance of additional shares in proportion to shares outstanding Stock split slide - New stock price take the inverse of the ratio of the split times the amount the stock sells - Every time goes up one point now make $1500 as opposed to $1000 Basis—what you really pay, adjusted for splits - Assume stock initially purchases $21/share after at 3 for 2 split new basis = 14 o Gain of 6 Do not pay tax until you sell. Don’t sell before one year Handout: Advantages and Disadvantages of Financing Stock P/E Ratio Approach - Know this Calculate a stocks fair value - Valuing growth scale - In good economy pair PE is more than 1
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This note was uploaded on 08/30/2010 for the course FINC 311 taught by Professor Murphy during the Spring '08 term at University of Delaware.

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Principles of Finance_Biederman_Final Study Guide -...

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