Chapter_09-APK-STOCK

Chapter_09-APK-STOCK - 9-1Click to edit Master subtitle...

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Unformatted text preview: 9-1Click to edit Master subtitle style9-1CHAPTER 9 (APK)Stocks and Their Valuation nFeatures of common stocknDetermining common stock valuesnPreferred stocknExplanation in the text book9-2Facts about common stocknRepresents ownershipnOwnership implies controlnStockholders elect directorsnDirectors elect managementnManagement’s goal: Maximize the stock price9-3Intrinsic Value and Stock PricenOutside investors, corporate insiders, and analysts use a variety of approaches to estimate a stock’s intrinsic value (P0).nIn equilibrium we assume that a stock’s price equals its intrinsic value.nOutsiders estimate intrinsic value to help determine which stocks are attractive to buy and/or sell.nStocks with a price below (above) its 9-4Determinants of Intrinsic Value and Stock Prices (Figure 1-1)9-5Different approaches for estimating the intrinsic value of a common stocknDividend growth modelnCorporate value modelnUsing the multiples of comparable firms9-6Dividend growth modelnValue of a stock is the present value of the future dividends expected to be generated by the stock.9-7...
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This note was uploaded on 08/30/2010 for the course FM 13678 taught by Professor Kellison during the Spring '10 term at St. Clair College.

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Chapter_09-APK-STOCK - 9-1Click to edit Master subtitle...

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