Lecture #11 - Ec 136, Financial Economics Lecture 11...

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Ec 136, Financial Economics Lecture 11 October 6
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Outline for today 1. Equities. 2. Equity valuation. 3. The Gordon growth model. www.econ.berkeley.edu/~szeidl/ec136/ec136index.htm Readings for this week: BKM 18.3-18.4, 18.7 (18.6 in editions 7&8) Problem set 4 : due October 13, Tuesday, in class.
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0. Midterm & 4 questions, maximal possible score: 96 & Mean score 82, standard deviation 13, high score 96. & 75th percentile= 76, median= 86, 25th percentile= 91 : & Rough suggested translation from your score to a letter grade: { A : 90-96 { B : 80-90 { C : 55-80
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1. Equities & Equities represent ownership share in the com- pany { Share of distributions such as dividends { Voting rights at shareholders’ meeting & Equity is residual claim : only receives payout if all other claims (salaries, debt, taxes, etc.) are met. & Limited liability { minimum share price is zero.
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Equity issuance and trading & Founders typically start a company with their own money and some venture-capital &nancing. & If the &rm is successful, equities can be issued in an initial public o±ering (IPO).
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Lecture #11 - Ec 136, Financial Economics Lecture 11...

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