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Unformatted text preview: (8)- Market price is the stock value based on perceived but possibly incorrect information as seen by the marginal investors. (10) 2.- The situation in which the actual market price equals the intrinsic value, so investors are indifferent between buying or selling a stock.- intrinsic value = stock price (10) 3. Intrinsic values are an estimate, and different analysts will have different estimate for the company at any given time. Its managers should also estimate their firms intrinsic value and then take and then take actions to maximize that value. (10) 4. - Compound interest occurs when interest is earned on prior periods interest.- Simple interest occurs when interest is not earned on interest. (27) 5. - Future Value = FVn = PV(1 + I)^n- Present Value = PVn = (FVn) / (1+ I)^n...
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This note was uploaded on 09/08/2010 for the course BUS 173A at San Jose State University .