Class 3

Class 3 - • Selling off of assets o Stocks: I.e. share,...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Ch. 5/ 6: Time Value of Money Organizing a business: o Sole proprietorship: Managers and owners not separate o Partnership: Managers and owners not separate o Corporation: Managers and owners usually separate Limited liability Owners and business taxed separately Capital markets: o Securities (i.e. stocks and bonds) are claims to future cash flows o Bonds: Upfront payment Get promise to receive fixed payments into the future Coupon rate tells what the interest payments will be (nothing to do w/ bond yield) Consequences of non-payment: Forced bankruptcy
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: • Selling off of assets o Stocks: I.e. share, equities Shareholders receive share of company profits • Securities valuation: o Time Value of Money o Can value any security and any asset o Money today worth more than money tomorrow Price inflation risk Default risk Opportunity cost of foregoing consumption today o Real Rate of Return: Accounts for opportunity cost and default risk o Nominal Rate of Return: Real rate + inflation o Simple vs. compound interest: Can compound annually, monthly, etc....
View Full Document

This note was uploaded on 06/11/2011 for the course BUSI 408 taught by Professor Croce during the Spring '08 term at UNC.

Page1 / 2

Class 3 - • Selling off of assets o Stocks: I.e. share,...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online