Day 16-Ch 7-10.26.11

Day 16-Ch 7-10.26.11 - Business Management 201 Day 16...

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Unformatted text preview: Business Management 201 Day 16 Chapter 7: Stock Valuation October 26, 2011 Day 16 Agenda 1) POW Quiz #7: Due Friday, October 28 at 11:59 PM 2) Ch 12 Reading Quiz Due Monday, Oct 31, 8:00 AM 3) Please Complete Course Survey 4) TA Review Sessions this Week Will Discuss Midterm: TA Open Lab SessionThursday 11:00 AM-12:00 PM in 3108 JKB TA Review SessionThursday 5:00 PM-6:00 PM in 3714 HBLL TA Open Lab SessionFriday 11:00 AM-1:00 PM in 184 TNRB 1) Midterm Exam Discussion 2) Chapter 7: Stock Valuation Discussion Midterm Exam Statistics Midterm Allocation to Grade: 20% High: 100% Low: 22.5% Mean: 72% Median: 75% Chapter 7: Chapter 7: Stock Valuation Stock Valuation Preferred Preferred Stock Stock Preferred stocks can usually be valued like a perpetuity: V = D k ps ps Preferred Stock Valuation Preferred Stock Example #1 Marooned Mateys preferred stock has a par value of $25 and pays a 2.86% semiannual dividend [i.e. 5.72% annual dividend]. The current selling price of one share of Marooned Mateys preferred stock is $37 . What is the return on one share of Marooned Mateys preferred stock? Marooned Mateys preferred stock has a par value of $25 and pays a 2.86% semiannual dividend [i.e. 5.72% annual dividend]. The current selling price of one share of Marooned Mateys preferred stock is $37 . What is the return on one share of Marooned Mateys preferred stock? k ps = 1.43 37 = 0.03865 = 3.87% Preferred Stock Example #1 Semiannual Dividend: $25 x 0.0286 = $0.715 Annual Dividend: $0.715 x 2 = $1.43 Preferred Stock Example #2 Kooky Kostumes preferred stock has a par value of $50 and pays a 2.36% semiannual dividend. The current selling price of one share of Kooky Kostumes preferred stock is $64 . What is the return on one share of Kooky Kostumes preferred stock? Kooky Kostumes preferred stock has a par value of $50 and pays a 2.36% semiannual dividend. The current selling price of one share of Kooky Kostumes preferred stock is $64 . What is the return on one share of Kooky Kostumes preferred stock? k ps = 2.36 64 = 0.03688 = 3.69% Preferred Stock Example #2 Semiannual Dividend: $50 x 0.0236 = $1.18 Annual Dividend: $1.18 x 2 = $2.36 Negotiation Tip Question: Who controls the negotiation? The one talking or the one asking questions? Answer: The one asking questions....
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Day 16-Ch 7-10.26.11 - Business Management 201 Day 16...

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