Chapter12update - 2008: The bear growled and investors...

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2008: The bear growled and investors howled Update to Chapter 12 of Ross, Westerfield, and Jordan’s Fundamentals of Corporate Finance, 9/e (McGraw-Hill: 2010) February 6, 2009 Bradford D. Jordan
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2008: The bear growled and investors howled 2008 entered the record books as one of the worst years for stock market investors in US history. How bad was it? The widely followed S&P 500 index, which tracks the total market value of 500 of the largest US corporations, plunged 37 percent for the year. Of the 500 stocks in the index, 485 were down for the year. Over the period 1926 – 2008, only the year 1931 had a lower return than 2008 (-43 percent versus -37 percent). Making matters worse, the downdraft continued with a further decline of 8.43 percent in January of 2009. In all, from November of 2007 (when the decline began) through January of 2009 (the last month available as this is written), the S&P 500 lost 45 percent of its value. Figure 1 shows the month-by-month performance of the S&P 500 during 2008. As
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This note was uploaded on 12/11/2011 for the course FINC 3610 taught by Professor Yost during the Fall '08 term at Auburn University.

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Chapter12update - 2008: The bear growled and investors...

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