Chap 9_Valuing Stocks

Chap 9_Valuing Stocks - Valuing Stocks Click to edit Master...

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RWJ, Chapter 9 M G M T 50 5, Fa ll Click to edit Master subtitle style Valuing Stocks
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RWJ, Chapter 9 M G M T 50 5, Fa ll 9/30/11 Stock represents ownership in the firm right to make investment decisions Stockholders vote to elect board of directors, and to adopt major proposals that affect the company. Stockholders are residual claimants: - they receive cash-flows after all other claimants are paid. Has no fixed maturity (assumed to have infinite life). Limited Liability They can at most lose their investment in the stock. Stockholders earn return through capital gains and through dividends. Dividends can be omitted. Stock Characteristics
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M G M T 50 5, Fa ll 9/30/11 This is a hybrid security between common stock and straight bond. It has some stock like characteristics, and some bond like characteristics. In bankruptcy, has a lower priority than straight debt, but a higher priority than common stock. Preferred Stock
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This note was uploaded on 09/30/2011 for the course SCHOOL OF 101 taught by Professor Abc during the Fall '11 term at Binghamton.

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Chap 9_Valuing Stocks - Valuing Stocks Click to edit Master...

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